Is Auto Liability Insurance a Waste of Money for Good Drivers?

If you are going to drive in this country, most states require that you carry auto liability insurance in the case of an auto accident. But if you are a good driver, does buying this type of insurance for such an unlikely event become a liability to your wallet?

If you think that it is unpractical for states to have laws that force good drivers to carry auto Liability insurance, you are not alone.  Many states like New Hampshire, New Mexico, and Florida feel the same way too. In fact, New Hampshire urges all good drivers to carry some type of auto liability insurance but does not force them.

The Insurance Information Institute collects claims information every year and demonstrates that a liability loss occurs with the following frequency:

Bodily Injury Losses – 1% of insured drivers have a loss each year                                                                                                                          Property Damage Losses - 3.5% of insured drivers have a loss each year.

With these types of numbers the idea of self-insurances starts making more sense. After all, why pay for somebody to manage your money for you? But don’t let the numbers fool you. At the time of an accident, these percentages will be meaningless.

Having Auto Liability Insurance is the Smart Thing to do

The whole point of insurance is protection against risks that are both unlikely and expensive. For example, if you are going through a green light and you hit a car that fails to stop at a red light, the passenger in the car may sustain severe injuries. It is very possible that the jury apportions 95% of liability to the car that did not stop at the red light, which leaves you with 5%. This is the part where the numbers can be deceiving because 5% doesn’t seem like much. However, when you add medical and legal costs, that number might grow in dollars.  

Having Auto Liability is the Socially Responsible to do

You don’t get insurance to cover a scratch on a car. You buy protection in the case you cause someone to sustain severe injuries. For instance, a drunk driver hits your car and kills a passenger. However, this driver had a clean record, and on paper, is consider a good driver. AS a result, he wasn’t required to get auto liability insurance. The driver’s total assets are worth a total of $5,000, and due to the accident, won’t be working any time soon.  This puts the value of your passenger’s death at $5,000.

Now ask yourself, is liability insurance a waste of money?

If you would like more information about the different type of auto insurance coverages available or would like to get a quote, please contact us for a consultation.