Paying for Auto Insurance at the pump:
I have often wondered how Insurance companies make so much money even though they pay out millions in claims. Could it be that the premiums you pay are more than you need to pay? Do you ever feel like you are just paying too much for your Auto Insurance?
Your automobile insurance is divided in three major coverages. Liability coverage, the second is your Collision coverage and third is your Comprehensive otherwise known as Fire and Theft.
Your Coverages:
Let me explain the coverages to you and then you can decide if you are paying too much for your insurance. Your Liability coverage which is required by law pays the other people in the other car or cars if you got into an accident and found to be at fault. The Collision coverage will pay for the damages done to your car whether you are at fault or not.
In essence you are saying to the Insurance Company," Mr. Insurance Company I am going to pay you every month to fix my car in case it gets damaged even if I am at fault". You both will agree on terms and sign a contract.
Comprehensive coverage (Fire and Theft) will cover your car for anything other than a collision like if it was stolen, caught fire, vandalized etc. There are other coverages in between these that pay for medical payments, loss of income etc.
For now we will just talk about these three coverages in a broad sense and take a look at how much the Insurance Companies remain capitalized in order to pay its claims.
Why Insurance?
Take it from me you don't want to be driving without insurance and you want to be sure that the other drivers are also insured, why? Because if you are hit by another vehicle and you suffer any kind of bodily injury and have to be hospitalized or lost income by not being able to work, you want to have some peace of mind knowing that there is money coming from somewhere to pay your bills as well as for your everyday living expense.
Let's face it, this is not always going to be the case because of how the insurance system is set up, follow me here now. By law you must carry Liability Insurance on your vehicle to be on the road legally. Remember this is the coverage that will pay for hitting another vehicle.
Here is the fact though, you can only hit another vehicle if your vehicle is moving and unless being pushed it will only move if being driven. You and I know that we can't drive this vehicle unless fuel in the tank.
So if you park your car in your garage, lock the door and went away on a two week vacation or a long awaited cruise for a month, why should you pay the liability insurance when the car is not being driven? Is there something wrong with that? Yet removing the coverage and reinstating it when you are back from vacation you are charged a penalty for not being insured. You could even have your license suspended.
Let's say you bought a new car and financed it through the bank, the bank technically owns the car until you have completely paid the loan and so they can and usually insist that you carry Collision coverage in case it was damaged in an accident or worst if accident was so bad it was a total loss.
Pay at the Pump.
Though I agree with that remember you can't have a collision if your car is not moving and it can only move if there is fuel in the tank, do you agree? So here is my theory, if the use of either of these coverages (Liability and Collision) is impossible without movement and movement depends on fuel shouldn't your payment be tied to fuel? What better way to do so than to include the charge in the price at the pump. By doing so you solve the problem and possibility of having uninsured drivers on the road.
If your fuel runs out then your vehicle will stop and you can't hit anything with it since it's not moving. Refuel it and you are instantly reinsured.
Insurance companies usually charge you according to the use of your vehicle, like if you drive your car to work or just using it for leisure. The farther you drive the more you pay within a certain mileage limit. An example is if you drive less than ten miles to work you pay less than if you drive over 10 miles. So here the insurance company is saying that the longer you keep your car moving the more likely you will get into an accident.
So you drive 50 miles one way to work, you need to burn more fuel than if you drive 7 miles. Why not include your premium into your fuel charge? Seems like a fair way to pay for insurance.
Park your car park your Insurance:
You then park your car in your company's' parking lot for 8 hrs. You go upstairs into your office and do a full day's work. Here your car is not moving for 8 hrs. and therefore won't hit anything or anyone yet you are paying the insurance company. When your car is in the repair shop, the parts are on back order and for the next three days you are renting a car. You purchase fuel for the rental and also might even have to purchase insurance on that car. Here you are now paying twice. The list goes on and on but when you are as big as the Insurance Companies you can make the rules in your favor. Or is it just one of the ways your Insurance company can make good on their promise to you.?
Though all this makes a good argument to tie fuel and insurance together the one most important missing piece is your agent. Here is where you will get professional advise on how best to protect your assets.
I like the saying "Insurance is like a parachute". You might complain about paying for it but glad you did whenever you need it. Take my advise and never go without Insurance.
