Why Is Car Insurance Important? 8 Life Examples

Every day, many of us jump into our cars and enjoy the freedom of the open road.

But do we think about the potential risks? Sometimes, we get so used to driving that we forget about the dangers that can pop up.

That’s where car insurance comes in – it’s like a safety net for when things don’t go as planned. Property damage liability coverage is required by law in most states and protects you if you damage someone else's property in an accident.

Why do you need car insurance? For financial protection.

In this article, we’ll examine eight real-life situations that show why car insurance is so necessary.

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1. Picture a regular Monday: you’re driving, and suddenly, you accidentally hit something like a pole, curb, or tree. Thankfully, you’re okay, but your car takes a hit. And luckily, you have comprehensive collision auto insurance.

Comprehensive collision auto insurance, often called “C&C,” is like a safety net. With it, you only have to worry about paying a deductible, a set amount from your pocket, before your insurance covers the remaining costs of your car’s repair or replacement.

Basically, comprehensive coverage protects your wallet. It keeps you from paying a large lump sum if your car gets damaged in unexpected accidents.

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2. A storm with fierce winds strikes, causing a nearby tree to topple onto your parked car, shattering the windshield. Your windshield cracked, and you need to replace it. Comprehensive auto insurance will be there for you; you only need to pay a deductible! With comprehensive insurance, you’re ready for the unexpected, and you can keep going with peace of mind, knowing your finances are safer.

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3. Imagine this scenario: you’re leaving a parking lot, and you accidentally collide with another car, causing damage to both vehicles.

Even worse - the other person doesn’t have any insurance.

If you have state-minimum car insurance (Liability Only) and hit an uninsured driver, you may be liable for all the expenses not covered in your policy. You may have to pay out of your pocket to cover the damage to your vehicle and yourself - a potential financial disaster we want to help you avoid. Uninsured motorist coverage can help pay for your medical bills and vehicle repairs if the at fault driver has no insurance.

OCHO recommends buying as much liability protection as your budget will comfortably allow. You can read more about the financial risks of driving without insurance here.

‍State minimum insurance is there to protect everyone else, not you and your family.

According to information from the Insurance Institute for Highway Safety (IIHS), the average cost of repairing a car after an accident is slightly over $4,000. This amount can significantly rise depending on the type of vehicle involved.

This example highlights the importance of having the right auto insurance coverage in place to handle such situations with as little stress as possible.

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4.  Now, imagine cruising through a scenic stretch of road through breathtaking natural surroundings, hair flowing in the wind. Suddenly, a wild animal darts onto the road, colliding with your car and causing damage. In this scenario, having comprehensive coverage within your auto insurance policy becomes a lifesaver. You’re only responsible for paying the deductible for the necessary repairs, relieving you of a substantial financial burden.

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5.  According to a report by the World Health Organization, you are four times as likely to have an auto accident if you use your phone while driving, with text messaging having the most severe impact. To read more about the most common car accidents in the US and how to prevent them, you can check out our blog here

Now, let’s explore the scenario where a moment’s distraction—texting while driving—causes you to miss a stop sign.

A multiple-car collision is triggered, causing injuries to several individuals. Statistics show that the average emergency room visit for auto accident-related injuries costs approximately $3,300 per person. In cases requiring hospitalization, the average expense soars to $57,000.

Adequate liability coverage within your insurance safeguards you from the burden of hefty out-of-pocket payments. Medical payments coverage can help cover hospital visits, ambulance fees, and rehabilitation expenses for you and your passengers. Auto insurance helps cover medical bills and provides financial security in the event you are involved in an accident. OCHO Plus combines liability with uninsured motorists and medical pay coverage to help provide more adequate coverage.

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Let’s take a break and look at what the numbers mean in your insurance policy:

THE NUMBERS IN YOUR INSURANCE POLICY

An insurance policy is more than just a piece of paper—it’s a promise of financial protection between you and your insurance company. When you purchase an auto insurance policy, you agree to pay regular premiums, and in return, the insurance company agrees to help cover certain costs if you’re involved in a car accident or face other unexpected events.

Your auto insurance policy is made up of different types of coverage, each designed to protect you from specific risks and expenses. For example, liability coverage helps pay for damages or injuries you cause to others, while collision coverage takes care of repair costs for your own vehicle after an accident, no matter who was at fault. Comprehensive coverage steps in when your car is damaged by things like falling objects, theft, or natural disasters—events that don’t involve a collision.

Another important part of many auto insurance policies is personal injury protection (sometimes called no-fault insurance). This coverage pays for medical bills, lost wages, and even funeral expenses for you and your passengers, regardless of who caused the accident. Having enough insurance in these areas means you’re less likely to face overwhelming out-of-pocket costs, such as medical expenses, legal fees, or repair bills.

Many states require drivers to carry a minimum amount of liability insurance to cover property damage and bodily injury, but these minimums may not be enough to fully protect your financial future. That’s why it’s smart to consider additional or optional coverages, like rental reimbursement coverage (which pays for a rental car while yours is being repaired) or gap insurance (which helps pay off your car loan if your vehicle is totaled and you owe more than it’s worth).

Choosing the right auto insurance policy means thinking about your own needs—your driving habits, the type of car you drive, and your budget. You can often lower your premiums by taking advantage of safe driver discounts, bundling multiple policies, or maintaining a clean driving record. By understanding the different types of coverage and how they work together, you can build a financial safety net that gives you peace of mind every time you get behind the wheel.

Remember, the right insurance policy isn’t just about meeting legal requirements—it’s about protecting yourself, your loved ones, and your financial future from life’s unexpected bumps in the road.

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6. Someone hits your car, and even though they have auto insurance, their coverage is not enough to protect and repair your vehicle or property. It happens more often than one would think.

There are a lot of people who get insurance without actually looking to see which one is the one that suits them best, or the more comprehensive insurance is too expensive for them. Therefore, they're often underinsured in most accidents.

Nonetheless, underinsured auto insurance coverage serves as a protective shield, preventing you from being financially vulnerable in such challenging situations.

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7. Imagine your city experiencing days of constant rain, leading to a significant flood that engulfs your car and inflicts substantial damage. Your vehicle, once your reliable mode of transportation, now faces the daunting task of recovery.

However, this is precisely where the comprehensive coverage aspect of auto insurance reveals its true worth, serving as a valuable asset that provides essential support when needed most in these unexpected and challenging situations.

With comprehensive coverage, you can navigate the daunting aftermath of a flood with greater peace of mind, knowing that your insurance has your back.

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8. While on the road, you suddenly find yourself caught in the unfortunate scenario of a hit-and-run incident—a predicament that approximately 13% of drivers in the United States can unfortunately relate to. In a hit-and-run accident, another driver involved in the incident flees the scene without stopping to exchange information or offer assistance, leaving you uncertain and vulnerable.

The unsettling reality is that uninsured drivers vary significantly across states, with some areas reporting alarming figures, such as 16% in California, 26.7% in Florida, and as low as 4.5% in Maine. In these distressing instances, it often turns out that the perpetrator is an uninsured motorist, which can be particularly troublesome as it leaves you responsible not only for the damages to your car but also potentially for your well-being.

Thankfully, uninsured motorist auto insurance coverage ensures you're not stranded in the aftermath of such irresponsible actions.

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As you're selecting an auto insurance policy, remember that different policies offer varying types of coverage. They're not all the same. So, make sure to be responsible and choose the one that aligns with your needs! Contact our team today to explore your options!

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Getting insurance is about securing a safety net for the future. When the time comes, you'll be ready to protect what matters most. Remember, knowledge is power.

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