Expert Advice on How to Understand Car Insurance Coverage

Billions of dollars are spent every year on personal car insurance, and yet most people fail to understand even the basics of their coverage. This is a serious mistake. After all, since state laws make auto insurance mandatory, you don’t have a choice as to whether or not you carry it - and that gives the insurance companies the upper hand. The only way to balance the scales is for you to be an informed consumer. Otherwise, you might as well be throwing money out the window.

Where Are Your Premiums Going?

Insurance policies are legal contracts that reduce economic risk by pooling it among many members. Few people can afford to absorb the cost of a serious automobile accident, so instead of relying only on ourselves, we join with our fellow citizens in “risk pools” administered by insurance companies. This way, hundreds (sometimes thousands) of people pay monthly premiums in order to cover costs incurred by an accident involving one of their pool members. Of course, the insurance company is a business, and as such, it takes its share of profits. But how much profit it takes is entirely up to you.

Comparison shop for the best deal and a greater portion of your premiums will go toward paying for damages. Simply go with the status quo and you’re probably paying for your agent’s kids to go to college, rather than getting an economic benefit from your coverage. Insurance is a financial product for your benefit, not your insurance agents - remember that!

How Can You Learn More About Car Insurance?

Let’s face it: There are a million subjects that are more interesting than car insurance, and if being an “informed consumer” meant devoting the bulk of your leisure time to becoming an insurance expert, most people would decide that the savings weren’t worth it. But the good news is that you don’t have to earn a Ph.D in Finance to be a good consumer, and the information you need to know is widely available on the internet. This web site, for example, has over 80 insurance articles in an easy-to-digest format.

Insurance may not be one of the most appealing subjects in the world, but in terms of your financial livelihood, it just might rank #1. In fact, Harvey W. Rubin, who is a Ph.D, says that “the money an individual spends on insurance over a lifetime surpasses all other types of expenditures - including the purchase of a home,” (Barron’s Dictionary of Insurance Terms, Fourth Edition). And of all insurance, personal auto is the most prevalent, demanding the largest share of our hard-earned dollars.

If you like throwing money away, go on living in ignorance. But when you consider that being an intelligent customer could save you in the tens (possibly hundreds) of thousands of dollars over your lifetime, it becomes clear that time spent at this web site is time well spent. A small investment of time in your insurance education could very well outperform all other investments in your portfolio, and best of all, you won’t owe the government any taxes on your profits!