While this article’s title may be a poor parody of the famous lines from Shakespeare’s Hamlet, there is really nothing comical about the fact that our current economy is in bad shape. Although there may be signs of improvement, the truth is that thousands and thousands of people are unemployed, and finding work is no easy task. Managing to survive until securing a new job requires persistence, patience, and a great deal of faith. Naturally, many will look for as many areas as possible to cut back on expenses.
It is not only the unemployed that do this. Many seemingly financially secure individuals are also making cutbacks out of concern for what may be in the future. Surprisingly, many drivers have chosen to cancel their car insurance as a means of saving money. Is this a wise move to make? Absolutely not! Let’s examine the why for a bit.
READ MORE :
- How to Make It Through Almost Anything With the Right Vehicle Survival Kit
- Top 5 Internet Business Myths Debunked!
- How to Save on Automobile Insurance
- Back To School Internet Safety Tips For Parents
- The Automobile: Profit and Status, Waste and Pollution
The Effect of Risk on Car Insurance Prices
Before continuing, this is a good place to say a few words regarding risk. In the insurance industry, risk management is critical to the management of car insurance premium costs. The concept of risk and the idea behind it is relatively easy to understand.
In simple terms, it can be explained as the chance of something going wrong. From an insurance perspective, the risk is all about statistics and probabilities. Specifically, what would be the probability of a loss concerning some action or category? Regarding repair work, consider this example. Which of the following automobiles do you think would be more expensive to repair in the event of an accident? Do you think it would be a Ford or possibly a Bentley?
The answer is obvious. With such a limited luxury automobile, the risk of higher repair costs will demand that higher premiums be collected to offset such an expense in the event of an accident. With this feeble example, remember that any action or category that is deemed by the insurance industry to carry higher risk will, in turn, be rewarded with a higher premium to offset that risk.
Now, consider risk from a personal perspective. Remember, we said that in simple terms, the risk is the chance of something going wrong. The insurance industry employs actuaries to aid in risk management.
These individuals use a combination of strong analytical skills, business knowledge, and understanding of human behavior to design and manage programs that control risk. If you as a driver choose to cancel your automobile coverage, you are personally throwing every thought of risk management to the wind. You are exposed yourself and your family to serious legal risks, untold liability, and potential financial ruin.
There are risks whether you are at fault or not. Let’s consider these.
At Fault Risk and Car Insurance Cost
If you are in an auto accident and are at fault, you could be held liable for bodily injury and/or property damage caused by that accident. The term ”liable” means you are legally responsible. Consider what your legal responsibility might be if you had no car insurance coverage in such a scenario.
If a lawsuit were filed against you by those injured in the accident, how would you pay? The court would say your assets would be used to pay for any damages awarded. If only one person were in the other vehicle, it would be serious, but what if there were more than one? What if the accident also injured a pedestrian? Without automobile insurance, you would be liable for repairing damage to the other automobile, which could cost thousands.
Not at Fault Risk and Car Insurance Cost
What if you were involved in an accident where you were not at fault or were only partially at fault? As the driver, if you have no automobile insurance coverage, the costs of defending yourself against legal action could be very high.
What if you were injured in an auto accident where the other driver is at fault, but their coverage was not enough to cover your losses. Worse yet, what if that driver had no insurance for the car and no money? Just because you might not be at fault doesn’t mean that you couldn’t have serious medical costs.
What about your vehicle? It could have sustained significant damage as well, and it will need to be repaired. Such repair costs would come from your pocket unless you have the correct automobile coverage.
Be Proactive – Get New Quotes for Car Insurance Annually
Don’t act carelessly about your car insurance coverage. After reading the above, you can see that what you risk paying by not having automobile insurance far outweighs what little savings you may recognize if you didn’t have the expense.
Many people become complacent about the cost of car insurance and never review their coverage or make changes. They think it is too much trouble to review their coverage or get new quotes on car insurance. We all work hard for what we have and can feel a bit of pride for what we may accomplish. Don’t risk unnecessary expense or potential loss. Remember that our life circumstances can change, and this could impact the cost of your car insurance coverage. For example, did you get married or divorced? Did you change jobs, which changed how far you now drive to work? Did you get a new car? These and many other reasons could affect your cost of automobile insurance. Do you want to be sure you get the best car insurance prices? Be proactive and take command of your finances. Review your coverages on at least an annual basis and take the time to get new quotes for your car insurance needs. You may be pleasantly surprised.
Edward Ferrell is a graduate of Auburn University with over 20 years of experience in the financial services and technology sectors. He recently started his own marketing and e-commerce company to focus on several niche e-commerce markets.
Edward understands from a deeply personal level that life is filled with challenges. He says that some challenges we face are due to our own good or bad decisions, while other challenges are somewhere down the road, just waiting for us to get there.