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What Does Auto Insurance Do For Me?
When you buy car insurance, you are agreeing to pay a fee for someone else to take over the financial responsibility placed on you by law.
Why do this?
Because its the law to have Liability Insurance, and deep inside you really do like insurance. Why do you think you sleep easy at night??
LAW
The main reason we have to buy insurance is to meet a legal
requirement. By law each person in the province who operates a motor
vehicle must be responsible for the consequences of their actions - and
the easiest way is to put a financial price on that responsibility. A
great deal of injury and damage can be done with a vehicle, and the law
insists that anyone who drives must be able to pay for the damages they
may cause. In Alberta the minimum requirement is currently $200,000. A
pink card is proof of insurance, and establishes that insurance is in
place to assume that financial responsibility.
FINE
If you are caught driving an uninsured vehicle, the fines can range
from $2,500 to $10,000 ... or a jail sentence. Also, you may have to
live with a court judgement that garnishees your wages for years to pay
for the damage you have caused. Worse, you may live with the knowledge
that someone you have injured, or the family of someone you have
killed, has suffered additional financial hardship because you didn't
take responsibility for your actions.
What you do
- You are expected to have an utmost good faith. (trustworthy and honest)
- You are expected to pay a premium.
- You must have an understanding of the coverage you are paying for.
What they do
- The insurance company agrees to pay for damages you cause, and will also represent you (in court if necessary) should you be falsely accused of causing damage.
- The insurance company will investigate and settle any claims that are made against you.
- The coverage depend on the type of insurance you purchase.
Why you should have insurance.
You're driving your car on a nice saturday afternoon, lets say you just won a small lottery, you have just won $200,000. Thinking to yourself I can't wait to get rid of this ugly 89' Topaz with more rust than a retired farmers tractor and settle down to a nice new BMW. As you're day dreaming you don't see the red light and smash the rear of a minivan.
Now things just got very real and serious.
Insured outcome
The family you just hit are suffering some minor injuries except for the Mother's who's neck is broken. Seems that the single mother wont be able to walk or work for a while. Now you have some major bills to pay that family, the minor injuries for the kids $3000, cost for written-off vehicle 35,000, nanny to help kids and mother for a few years years 100,000, The few years of income for injured mother who happened to be a lawyer 500,000,
Full costs = 638,000.......Knowing you have 1,000,000 liability on your car insurance PRICELESS.
Uninsured outcome
Since you don't believe in car insurance and haven't had it for the last year, you have saved about $800 that would have gone to the insurance company. good for you (sarcasm).
Now the bill we calculated earlier came up to 638,000 plus the $2500 fine for not having insurance which is illegal in this country. So now we have a total of 640,500.
Goods thing you won the lottery hey, Final total - 440,500.
The look on you face when you've given away your lottery winnings and see the final bill, once again....PRICELESS.
Laibility and Physical Damage
However it is not required to have Physical Damage on all insurance policies. Physical Damage protects your vehicle, where as Liability protects all third parties. There fore its the the law to be able to compensate a third party if you cause the damages but its not mandatory you have coverage to fix your own vehicle.
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