The Pros and Cons of Auto Insurance

The Pros and Cons of Insurance

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Insurance is a necessity. As of 2016, there were more than 6 million auto accidents in the United States each year, with 34 thousand deaths and more than 2 million injuries, not to mention billions of dollars of damage to vehicles and private property. The auto insurance industry’s total revenue is currently estimated to be $308 billion dollars a year. Insurance is big business, and a driving force in our economy. 

If you’ve ever had the misfortune of being in an accident, it can be hard to see the value of carrying insurance in the first place though, and you may ask yourself, “What is insurance actually doing for me?”

What is Insurance?

According to Investopedia, insurance is a way for individuals to mitigate their financial risk in the case of an accident. An insurance policy serves as an agreement between the customer and the insurance company that if an emergency situation arises, the individual will receive financial protection, usually in the form of reimbursement, from the insurer. Insurance is also a legal requirement in every state. 

With insurance, the consumer pays a monthly premium for coverage. Insurance policies typically have a deductible which is a minimum, upfront amount the consumer must pay before the insurance company will pay the remainder of the costs. The higher the premium, the lower the deductible. 

Insurance companies are able to cover the cost of accidents because they pool customer premiums together, setting their rates based on your level of risk. 

What are the Pros of Insurance?

It helps to think of an insurance policy as protection against the unknown. An insurance policy provides the policyholder with:

  • Financial protection 
  • Legal protection
  • Medical protection 

Insurance shifts the liability from the policyholder to the insurance company. Depending on the policy, insurance usually covers things like property damage, medical expenses, and legal fees. Being involved in an accident without proper insurance coverage can lead to personal disaster as the medical and property damage costs alone can mean financial ruin for most individuals.

What are the Cons of Insurance?

To be perfectly honest, there aren’t many cons. The essential concern is balancing the coverage you need with what you can actually afford. For many, carrying an insurance policy may be a financial hardship. It may seem unnecessary if you’ve never been involved in an accident. That perception drives consumers to purchase only the minimum coverage required by their state. In the event of a catastrophe, a basic policy might not adequately cover the cost of the accident.

Even if the cost of your monthly premium isn’t prohibitive, your deductible might be sky-high. This is especially true in the case of cheap, basic coverage, yet many consumers don’t understand and are hit with sticker shock when they get into an accident. 

Some consumers are leery of insurance due to past experience. Slow repairs and claims that are held up leave a paying customer without a vehicle and financial insecurity. Fortunately, there are proactive measures you can take to help speed up the resolution of a claim.  

Speeding Up a Claim Due to Evidence Provided

The main reason that insurance claims get held up is due to a lack of evidence establishing who was at fault. Fault matters to the insurance company; it dictates who pays the claim. In situations where fault isn’t clear, or the at-fault party’s insurance carrier is taking too long to settle the claim, your carrier might even have to engage in subrogation.

Scene Finder can help speed the process along. The Scene Finder App allows Good Samaritans and passersby to take videos and pictures of accidents using their mobile device. This is what we call “evidenced-based content.” If evidence is matched to an open insurance claim, the person who submitted it qualifies for a cash incentive. That makes Scene Finder a great back up option to help provide you with the evidence you need to resolve your claim. 

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