Why have Car Insurance?

It is common knowledge that everybody who drives should have car insurance. However, it appears that there are very few sources who ever explain to us or justify just why it is so crucial.

There is a good reason that at least CTP (Compulsory Third Party) insurance is required by law in some states of Australia. Should you injure somebody else or even cause a fatality to a third party in an accident, then your insurance will provide the coverage you need against claims for repayments.

Indisputably, this shows the necessity of even the most basic car insurance, as it demonstrates a fundamental human decency to provide help to those with physical injuries you may have caused.

But there is reason to upgrade your policy further. Damaging expensive property in accidents, for example other vehicles, could land you in serious trouble if you are faced with the bill and you have no insurance to cover the costs.

Hypothetically, you could rear-end an expensive sports car and then be forced to pay damages that you are unable to afford.

If you opt for comprehensive car insurance, depending on your excess, then you will be absolutely secure in the event of an accident. You can be covered for repairs and possibly even a replacement! Not only does this provide a general peace of mind, but it could save you a lot of money if you are unlucky enough to be involved in a serious accident that is your fault.

Comprehensive insurance pays for the damages associated with a wide variety of incidents including collisions, theft, and fire, but it also may cover the value of any items stolen from your car (not just if your car itself is stolen), medical expenses you may incur from your injuries (unusual), as well as personal accident protection.

Also, you have to consider the costs involved with making small, manual repairs to your car over a period of time. Without insurance you could potentially end up paying for expensive tools, or even a mechanic, to make minor repairs that you do not have the expertise to carry out personally. Over five years, for example, all those dents, scratches and engine failures can add up and this could amount to a sum far larger than that of pricier insurance.

Critics will, of course, claim that increasingly comprehensive car insurance is not a necessity if you are a careful driver who doesn’t cause accidents that could damage your vehicle or the wellbeing of other drivers. However, there are rare but by no means non-existent cases that must be considered, where you may be involved in a serious accident that is not your fault, and end up having to foot the bill yourself because the motorist responsible for the damage does not have insurance.

Then there’s the issue of how expensive the insurance is. Naturally, if you want insurance that covers a wide range of claims such as fire damage and theft then your premium will be greater. However, you can keep your monthly payments down by asking for more excess, in simple terms a deal between you and your insurance provider that states in the event of an accident you will pay an agreed proportion of repairs out of your own pocket. This can lower your monthly payments, ultimately giving you the advantages of good auto insurance for an affordable rate.