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Automobile Insurance

Owning a car has become more of a necessity than a luxury. Many at time people find it convenient to own a car to help them run their daily affairs effectively. However, a car is a mechanical product that just like others, is subject to breakdowns and accidents. While it is not necessarily obvious that one might make an accident, there is still no harm in thinking about the possibility of one happening and that forms the basis of automobile insurance. Automobile insurance therefore is a service that car owners purchase for there cars, motorbikes and trucks among other road vehicles. The policy is considered as a road risk insurance that seeks to compensate one from financial losses just in case an accident occurs and immune the car owner against any liability that comes along with the occurrence of the risk.

Read more about road risk insurance

How does it work?

This is a fair question since you ought to understand automobile insurance before you get one for your car. Can you imagine how much you could be liable to pay in the event of an accident. Well,this depends with the extent of damages that the accident has caused but in case of a severe accident, you would be liable for quite a big sum. The concept of uncertainty of the future forms the very fabric of insurance. Insurance operates under "a pooling of risks". The contractual agreement between you and the insurance company is effected by the payment of the first premium. This payment is periodic and non refundable. Many people pay for the risk but it does not necessarily occur therefore the money can be used to compensate those who bought a cover for the risk and suffered the same risk. Most insurance companies have an annual payment scheme that allows you enjoy the cover for a period of one year after which the policy becomes due for renewal. However, other companies also allow certain sets of payment such as quarterly, semi-annually and even two or three years depending on the depth of your pocket.

Importance of having an automobile insurance.

As human beings, we do not have the capability to foretell what will happen later today, tomorrow or the days to come. However, the main question remains how prepared are we in financial terms to go around these uncertain events when they occur? When a risk occur, maybe an accident, car damage or theft, you do not need to worry about where the money will come from to compensate you. If your car is damaged the insurance company would repair it for you or buy you another in case it is beyond repair. If the accident gives rise to destruction of property, injury or death of a third party, the insurance company is liable for the compensation of the third parties. This is a significantly large amount if it were to come from your pocket. If you caused a problem it is only fair that you solve it and that is where automobile insurance prove to be very important to protect you from any financial loss in the event that the risk you covered occurs.