
What Drives Personal Auto Insurance Rates?
If you drive a vehicle, you are required by law to have personal auto insurance. But why do we need it?
Consider hitting a car and injuring three passengers. If both your vehicle and the other vehicle are valued at $20,000 and considered total losses, and each passenger has medical claims of $20,000, this quickly adds up to $100,000! That’s an amount most individuals wouldn’t want to have to include in their annual budgets.
The function of insurance is to accept the risk from many people to pay for the losses of the few. Personal auto insurance protects drivers from having to personally pay for all the damages they are responsible for resulting from an auto accident. Even though you paid your insurance company much less in premiums, the insurance company pays these higher amounts on your behalf based on your policy coverage.