Can you help me understand what car insurance actually does?
I don't think I understand what the purpose of car insurance is, so it's hard to grasp why it's legally mandatory.
Answer provided by
Answered on May 21, 2021
“Car insurance is a legal agreement that you enter into with a car insurance company. A car insurance policy protects you from financial liabilities that may occur as a result of your actions or another driver’s actions.
Most states have a minimum car insurance requirement, including liability car insurance which protects others if you’re at fault in an accident.
There are different types of car insurance. Each type either covers damage you do to someone else or their property, or damage that someone else does to you or your property.
By paying a premium to your insurance company, they are agreeing to take on the risk of insuring you. Based on the coverage you have on your policy, they are agreeing to cover any costs associated with your actions.
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