How Car Insurance Can Keep You Out of Debt

by Guest on August 27, 2012 · 0 comments

Personal car auto insurance is a mandate by the Department of Motor Vehicles in every state. Drivers must maintain state minimums for car insurance, have current and valid driver’s licenses, and current registrations for their vehicles. Although it seems like an unnecessary expense, it is a violation to operate a car without auto insurance. For disobeying the law and not having insurance coverage, a person involved in an accident could face a lifetime of overwhelming debt.

Importance of Auto Insurance

Auto insurance protects people and their personal assets from financial loss due to lawsuits filed after an accident. Expenses related to accidents are not limited to cars or people and include other property. For example, a guardrail on a highway is under the Department of Transportation’s jurisdiction; however, a home is under the category of personal property. In an accident, if the driver causes damage to either, having no insurance means out-of-pocket expenses. When a vehicle is not insured, a car accident causes significant debt.

Unfortunately, most accidents end up as lawsuits with large medical bills. Additionally, lawyer fees and other related expenses increase the lawsuit amount. A case against the driver at fault could result in a settlement in the hundreds of thousands of dollars. By paying insurance premiums, motorists safeguard their personal assets.

Fines and Possible Imprisonment

Without insurance, a motorist has to pay fines or risk suspension of his or her driver’s license. If that were not enough, a person could face jail time. Paying for a fine is one thing but going to jail is another, and often, people lose their jobs or certifications. Having a permanent arrest record is a reality and it is the source for loss of an otherwise impeccable reputation. Some jobs require that their employees maintain a blemish-free police record. Under these circumstances, if there is an arrest record, the employer has no choice but to immediately fire that employee. The consequence for not having car insurance is more than the cost of a fine or jail record and is not worth the risk.

Automobile Seizure

In some jurisdictions, a car stopped by the police for a driving violation that is uninsured is subject to seizure. Many times drivers without car insurance do not have registrations for vehicles or current driver’s licenses, which increases the likelihood of more charges and possible imprisonment. In such cases, uninsured motorists may permanently lose their driver’s licenses. Worse yet, if the car has a note, the lien holder can request payment in full even if there is time remaining on the loan.

The Real Cost

While driving in wet weather, a car slides and it hits another car that causes significant damage to its front end. The drivers and passengers in both cars sustain physical injuries. According to the police, the driver whose car slid on wet leaves is at fault. Although driving cautiously, the driver lost control of the car. At the accident scene, the clock is ticking as the ambulances transport everyone to the hospital and tow trucks remove both cars. Medical costs are expensive even for short visits to the emergency room and could be more than $5,000. These costs do not include future medical and rehabilitation bills for the injured parties.

Unless you have unlimited funds or a large bank account, you cannot afford to pay for the expenses of the accident. Even though you have unused sick time and vacation days, recovery time could be several months or possibly years. Another reality of the accident is the medical bills of the other driver in the other car and his or her car repairs. Several other good reasons to have car insurance include capping lawsuit amounts, protecting personal assets, and avoiding out-of-pocket costs for accident related expenses.

When you look at the cost of maintaining personal car auto insurance, it is a small price to pay for peace of mind. The monthly premium guards against out-of-pocket costs for your medical bills as well as the other driver’s incurred bills. Repairing an automobile is expensive and is another key benefit of car insurance because you do not have to pay repair bills or rental car fees.

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