Car Insurance
Whenever you get behind the wheel of a car, it is possible that you may cause damage to other people’s property, or injure – or even kill – yourself, other drivers, passengers or pedestrians.
Mandatory Insurance Coverage
Most people don’t have the money to pay for the losses (property damage, injury, death) they might cause while driving, so governments require vehicle owners to carry a certain amount of insurance to cover any losses they might cause others to suffer (Liability).
Some governments, including those of every province and territory in Canada, also require owners to carry coverage for their own medical expenses and loss of income resulting from driving-related injuries (Accident Benefits/Bodily Injury or AB/BI).
Optional Insurance Coverage
You can also voluntarily purchase additional insurance for your car, including:
Coverage for damage to your car (Collision)
Protection against theft, vandalism and other perils (Comprehensive)
How Insurance Works
While it may seem complex, insurance is really quite simple: The payments (or premiums) of the many pay for the losses of a few. Your premiums go into a large pool, if you will, at your insurance company. The claims of the few are paid from that pool. Because there are more people contributing to the pool than there are making claims, there is always enough to pay the claims – even large single claims like when someone is permanently disabled as a result of a car collision, or many smaller claims like those resulting from a natural disaster. (The 1998 ice storm that hit parts of Ontario, Quebec and New Brunswick resulted in an estimated 700,000 claims for damage totalling $1.4 billion.)
Annual replenishing
Your insurance is an annual contract, so the pool operates for only one year at a time. Your premiums and the premiums of others are based on how much money the insurance companies think they will need to pay the coming year’s claims. Your premiums do not build up over the years – unlike the premiums for
some types of life insurance.
some types of life insurance.
How premiums are calculated
Within reasonable limits, some of which are prescribed by law, your premium is calculated to reflect the probability that you will make a claim – that is, that you will draw funds from the insurance pool. Those who are unlikely to draw from the pool pay less than those who are more likely to draw from it.
Insurers take many factors into consideration to determine the likelihood that you will make a claim. A common misconception is that a policyholder who has never made a claim should pay less, little or nothing for insurance. While it is true that past claims history is important, a more reliable indicator of how likely a person or business is to make a claim is the statistical group to which he/she/it belongs.
Your Insurance Dollar
Here is a breakdown of where your insurance premium dollars go.
For every dollar of premiums gathered from policyholders, 53.1¢ go back to policyholders in the form of claims, 15.9¢ go back to communities in the form of various government taxes on insurance, 20.5¢ go to industry operating and regulatory costs and 10.5¢ go to industry profit.
These percentages are based on a 7-year national average from 2004 to 2010.
Insurance pays for …
Insurance pays for only those types of losses described in your contract. It is very important that you read your policy and/or talk to your insurance representative about what you are covered for and what you’re not. Insurance will not pay for every problem that you may encounter, nor is it a maintenance contract. Insurance is generally intended – and priced accordingly – to help policyholders cope with the financial consequences of unpredictable events that are "sudden and accidental." If, for example, you live on a floodplain by a river, flooding of your property in the spring is not sudden or accidental; it is inevitable and, therefore, uninsurable.
True, the insuranceinformation Postings about motorcycle and car very useful and very helpful
ReplyDeleteWell, I completely agree with your blog, Every one should take insurance for their vehicle. As far as I Concerned, insurance may help us in a lot ways.
ReplyDeletecar recovery
Thanks for sharing this with us ..........Fantastic post
The best auto insurance companies could be such companies which provide cheap car insurance within your budget without any hassle, have quality customer service and have a strong financial position. These are the main criteria to choose the best auto insurance companies. Claims pages
ReplyDeleteWe all need to take insurance for our car. But its better to know how we can save money on car insurance. To know about this please Click here. You will get valuable tips
ReplyDeletenice info please keep sharing also check here u guys
ReplyDeletecar insurance in us
what a great info please visit here for more infor
ReplyDeleteCheapest Homeowners Insurance Companies in Texas