Auto Insurance - What is it and Why Have it?
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The History of Insurance:
Insurance from an economic or legal point of view is a form of risk-management. The idea evolved from an age-old code of neighborliness. In olden times if your home burned down the local community would all get together and help you rebuild the property. The notion was if you helped others they would help you if ever the need arose. The history of Insurance goes back as far as ancient Persia but becomes more familiar as we move into more recent times. Lloyds of London, is arguably one of the best known “insurance co-operatives” in the world. It was born in the seventeenth century, when one Mr. Lloyd opened a coffeehouse near London docks. It soon became a favored meeting place where merchants, ship owners, sea captains and others met to exchange news of ships and cargoes. Many ships and cargoes never made it in those days. Merchants and owners looked for business people who were prepared to underwrite cargoes and ships in case of loss. The business people charged a premium to cover the ship and or a cargo. If the ship and cargo reached its destination they kept the money, if it did not they had to pay the owners compensation.
What is auto insurance?
In the case of burgeoning numbers of cars on the nation’s road there is very real risk of accident. Like the ship owners people wanted to protect their investment, car insurance means that for a premium the car owner covers loss or damage to his car and can also protect himself from having to pay large sums of compensation to other people if his car mars their property. Insurance companies cover the risk. If the driver avoids accidents they get to keep the money if not they are legally obliged to pay the costs involved.
Why have it?
You have it because it is a legal requirement. But from the legal side of things, having adequate car insurance makes life considerably easier if you are unfortunate enough to be involved in a road accident. Depending on the cover you have paid for, you will generally find the insurance paying for damages and repair to your own car. A car is the second largest purchase you make after a house and it also pays for damage to other people’s property that includes others’ cars and anything else that might be affected by the accident. This includes injury to other people and yourself. Having insurance frees you from having to pay legal damages, which could bankrupt you and in many cases cause you to lose your home.
It’s one of those benefits that makes your life a whole lot better and means you sleep a lot easier at night.
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05 June 2008, 3:07 pm
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