Insurance reduces incurring financial risks because you are shifting it to the insurer in exchange for paying a premium. It provides a safety net because the insurer pays for financial damages when the insured object or person is harmed.
For example, if someone vandalized your house, your home insurance policy will cover the damages and incidental costs. Meanwhile, if your employee stole, then your business insurance policy will pay for the losses incurred.
There are various types of insurance available, and you should purchase according to your needs. Hence, here is a guide about the risks and costs involved when you drive uninsured.
What Is Auto Insurance?
When you own a car and take it on public roads, you are legally responsible for incurring accidents and damages. The insurer agrees to pay the losses covered and outlined in your policy in exchange for paying a premium.
Additionally, it also provides coverage for someone not in your policy when driving your car with consent. Auto insurance protects you from financial liabilities in case of a car accident, theft, and the like.
It has different types of coverages that can cater to the different types of protection you need. If you have any questions about what coverage to get, simply communicate with your state’s local independent agent.
They can help you understand your state’s requirements and which coverages are right for you. They can also help identify any discounts for which you may qualify.
Risks of Driving Without Insurance
Auto insurance is required in almost all states. Accordingly, here is a breakdown of possible risks when pulled over without auto insurance:
1. Financial Liabilities
When you are at fault in an accident, you may also face legal complications. The opposing party’s insurer can sue you for bodily injuries and property damages.
Consequently, this would affect your driving records. You also have to pay a huge amount if there are medical expenses and other damages incurred.
However, when it’s hard to determine who is responsible for the accident, having insurance is useful. You will have a representative on your behalf and chase after indemnification of damages.
Hence, the financial responsibility does not only fall on you!
The penalties vary in different states, ranging from $50 to $5,000. Sometimes, it is even more expensive to get a ticket than purchasing liability insurance at a minimum.
Thus, driving without insurance could cause you hefty penalties!
3.Suspension of License
There are forty-four states that mandate having auto insurance. Consequently, If it is verified that you are driving without auto insurance, your license is suspended.
Accordingly, suspension of the license varies by state, and usually, a hefty fine accompanies the penalty.
Moreover, your vehicle can get towed since the officer has the right and discretion to tow your vehicle or not. Hence, when your car is impounded, you have to pay additional fees aside from the fine you paid earlier.
Coverage of Auto Insurance
As mentioned, auto insurance protects you from the expenses of being involved in an accident. Accordingly, if you are buying insurance for your car, it is important to know and understand all the options available.
Consequently, this would help you decide on what coverage best fits your needs and budget. Hence, here are the most common types of coverage for auto insurance:
- Collision Coverage: No matter who is at fault, it covers damages to your car if you are involved in an accident. Your insurance company will pay or reimburse you for the repairs or replacement of your car. However, collision coverage will not pay or reimburse you for the wear and tear on your car.
- Comprehensive Coverage: It covers damages and losses not caused by an event while driving, such as fire, theft, and the like. Like the collision coverage, the insurer will compensate you for the damages incurred, minus the deductibles. Hence, it means that you have to pay out-of-pocket costs before you can claim for reimbursement.
- Glass Coverage: It covers damages to your windshield and may also include your side and rear windows.
- Liability Coverage: It protects you from financial liabilities on bodily injuries due to the accident you caused. Additionally, it also pays for property damage liability you caused to someone else’s property while driving. But, it does not pay for the injuries you and your passengers incurred and the damages to your vehicle. There is separate coverage for these damages.
- Medical Payments Coverage: If you and your passengers are involved in an accident, this coverage helps pay for bills associated with the injuries. It may cover costs from surgery, laboratory tests, x-rays, and related expenses.
- Personal Injury Protection: It covers your child care expenses, lost salary, medical expenses, and related damages.
- Uninsured or Underinsured Motorist (UM/UIM) Coverage: Uninsured driver means the driver does not have insurance. Meanwhile, underinsured means their liability limits are not enough. Consequently, this coverage protects you from injuries and damages to your property caused by underinsured or uninsured drivers. It commonly pays for your lost salary, medical treatment, or damages incurred on your vehicle.
Cost of Auto Insurance
The cost of motorcycle insurance varies, depending on your driving history, kind of motorcycle, and other details. The average cost of a full coverage policy for motorcycle insurance in the US is around $1,100.
Additionally, some states have more expensive insurance rates than others which impacts your insurance costs. States from the southeast part of the US usually have more expensive costs for coverage like Louisiana.
Factors that Affect Cost of Auto Insurance
Each driver has different circumstances that can affect the coverage they would need. Hence, here are the following factors that may influence the cost of your auto insurance:
- Age: It is a significant factor since insurers assess different risks you pose for the insurers. Consequently, insurers charge younger drivers than mature ones.
- Gender: Women pay cheaper premiums than men because, statistically, women tend to get involved in fewer accidents.
- Location: Insurance rates depend on where you live and where you park your car, also known as your garage address.
- Type of Vehicle: The cost of your insurance depends on your car’s engine size, make, and model.
- Type of ownership: Your insurance premiums vary by ownership status, such as owned, finance, or leased.
- Type of Coverage: The insurance cost depends on what coverage you choose, which could be your state’s minimum liability or customized insurance.
- Driving Records: Your driving history is also taken into consideration as this poses risks for your insurer. The insurance company will see if you were associated with any accidents, claims, or traffic violations over the past years.
- Policy Limits and Deductibles: Your insurance costs also depend on the level of protection you opted for. For example, if your policy limit is enough, you would not incur high out-of-pocket costs.
Safety and Security Features and Programs: Your insurance cost is lower if you have security features installed on your vehicle. If you have an anti-lock brake system or anti-theft recovery system, you are eligible for a discount.
Discounts Available to Minimize Cost of Insurance
Auto insurance provides financial protection for motorcycle owners since it protects the owner from liabilities and losses. Consequently, the following are discounts available to have cheaper insurance rates:
- Multi-car Discount: If you have more than one car, insure it to one company because you can save money from multi-car discounts.
- Multi-policy Discount: You may supplement your other policies like home or life insurance to auto insurance and have a bundling discount.
- Safe Driver Discount: When you have a good driving history, you are eligible for a safe driving discount. It means that you rarely cause or have no at-fault accidents, traffic violations, and the like for the past years.
- Training Course Discount: After completing a defensive driving course, you are eligible for at least a 5% discount. You could check the training courses available in GEICO since every state has different requirements and accredited courses.
- Anti-theft Discount: When you install safety and security features in your car, you may be eligible for a discount. An example of such are car alarms or recovery devices like a GPS theft-recovery system.
Importance of Auto Insurance
The purpose of auto insurance is to protect you and your vehicle. Accordingly, it also helps protect your fellow drivers.
Hence, listed below are the reasons why auto insurance is necessary:
- Bodily Injuries – Your insurance policy will pay for your medical bills when you get involved in an accident.
- Bodily Injuries of Others – Auto insurance saves you from incurring litigation costs from legal complications. It also pays for the medical expenses of others involved in the accident, such as your passengers.
- Property Damages – Your policy not only covers bodily injuries. It also covers damages to your car that are not caused by the normal wear and tear of the vehicle.
- Property Damages of Others – Your collision coverage will pay for the property damages you have caused to others.
The highlight is that auto insurance is a financial necessity. Without insurance, you are at risk of facing expensive tickets, hefty fines, suspension of license, and the like.
Auto insurance is vital not only for your safety, for your fellow drivers as well. Thus, purchase the right coverage!
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