Libre Debate Blog

Lets start off with a simple explanation of how insurance works. In the good old days before those kind men got together in the Lloyds coffee shop, people were responsible for their own losses. If the horse pulled their cart into a ditch and this broke the wheel, the owner had to put his hands into his pock’ets (which fortunately had already been invented) and pay someone to repair the wheel. But once people could share the risks, life was suddenly better. If you gather together a big enough group of cart owners, each will only have to pay a small amount into the central fund to cover the losses of the few who have accidents. Those men at Lloyds were on to a winning business formula. Moving into modern times, the idea of spreading the risk is the same and, with thousands of people in each group, the cost of loss is divided into small premiums. But, with profits under pressure, the insurance companies came up with a new variation on the old theme. Suppose they could persuade their customers to accept the risk of some of their losses. This would then become self-insurance for part of the risk. The rest would be paid by the insurance companies. So the deductible was born. You agree to pay the first portion of any loss. In the case of traffic accidents, most of the fender benders are minor and don’t cost much to repair. That means you pay for most of the repairs yourself and the insurance companies get richer. Ironically, if no-one opted for the deductible, the increase in the premium for everyone in the group would be trivial.

So let’s get to an actual example to see how it works. If you agree to accept a deductible of $1,000, you will be given a discount on the premium. Say you save 10% over the year. Now that’s a good saving if you manage to get through the year without having an accident. But suppose your luck is not good and you have an accident. The bill for repairs is $900. You put your hand in your pocket (pockets are such useful things – always seeming to have money in them) and pull out the dollars. Was your 10% saving over the year more than $900? If not, you are making a loss, not just on the insurance policy but, if you had to use your credit card, on the interest added to the $900 until it is paid off. What would happen if your run of bad luck continued and you had a second accident in the year? Do you have another $1,000 as savings or available to borrow? Perhaps we should not be so pessimistic. Worst case scenarios are always better applied to other people and never to you.

The higher the deductible you accept, the more of the risk you are accepting. Cheap car insurance is a wonderful thing to have so long as your luck holds up. But if your luck fails, the maximum deductible is going to empty that magic pocket of yours. And here’s the thing – you can be the safest driver in the world, always super careful, always following all the rules, and then you meet a dork behind the wheel of another vehicle and suddenly you’re wrapped round a tree. So look for cheap auto insurance, but always look at your cash position and ask yourself how well you would cope if the worst happened. Deductibles are good for people with a margin of financial safety.

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The weather conditions should not affect anything. Of course, it is clear to everybody that in winter accidents are more frequent, but you also have to remember that avoiding an accident is much more valuable than knowing how to recover from it. But in case you did end up in an accident please know what to do. Let us try to explain everything you will require to understand while finding yourself a victim on the road. Here are a few very strong advices that will definitely help you to get through a difficult time of your life.

We would want you to read these points carefully and if you have an opportunity to print the information given below please do and make sure you keep it not to far away.

First of all it is important to take a deep breath and not to panic. Analyze the situation and determine the equivalent of losses. The damage can be significant or slightly important. In any case you have to consider that it is easy to make the situation even worse than it is. In any case, what you must know is that sometimes medical assistance is what you need to think of in the first place. Smallest details count.

You have to know to report police about any accidents you find yourself in. It has to be legal so there is a way to deal with the situation. Do not try to escape from the scene or arrange anything without police knowing about it. This will get you into more trouble. Police will make a full report of everything that happen and conclude with the verdict.

Do not let anybody get you blinded. Talk only with policemen about the accident. We know sometimes it is difficult to keep it quiet about what happened but take a look at it from a different point of view. While in panic people let themselves go, not realizing what it can get themselves into. Limit all of the conversations about the accident on the road and do not confess anything. The only two people that should know all honesty are the policeman and insurance company person.

Remember to make notes. People are so shocked and nervous after the accident that they forget the most important part – to write down names, addresses, phone contacts of those who were involved in the car accident with them. But you have to ask your insurance company’s advice while you are waiting for police to arrive. The insurance company guy will definitely tell you to recollect the name of the insurance company the others are dealing with plus their car’s identification number.

You should call your insurance company or your insurance agent as soon as you found yourself in the accident. He must know it before anybody. Please inform him about the smallest details and don’t be afraid to speak the truth even if you were the one responsible for the accident.

You ca also find some car insurance quotes on different websites and read them before you hit the road. We don’t mean you have to do it everyday but it is always good to know how to help ay case when it occurs. You can also get car insurance quotes from the insurance company itself if you have chosen one already. Good luck and be safe!

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