If you cause an auto accident, it is likely that you will be held responsible for the losses of any other people involved. As a result, a claim may be made or a lawsuit may be filed against you to cover those losses. You may end up having to pay not only for the property damage you cause, but also for medical expenses, lost wages, and pain and suffering of any injured person involved in the accident. Needless to say, the amount of money you may have to pay could be substantial.
If you are not insured, anything of value that you own, including your house, your savings, part of your future wages, and other tangible assets, may be taken from you in order to pay for the losses. Automobile liability insurance is designed to protect you so that this doesn’t happen. Liability insurance also typically pays for an attorney to defend you against any legal claim or lawsuit that may be payable under the policy. You can also buy extra insurance to cover any damages to your car. This optional coverage will help pay for your losses whether or not you were the person at fault. If you have a loan against your car, this additional coverage may be required by your lender.
Insurance is based on the theory that only a small percentage of all drivers will be involved in accidents. The premiums paid by all drivers during the course of a year are used to pay for the losses of those drivers who are involved in accidents. When you buy auto insurance, you receive financial protection in case you become involved in an accident. You also make sure that any other person injured through your fault will recover the losses that you cause.
It is definitely very important to make sure you have auto insurance. Some states even require that you have auto insurance under law.