Why is car insurance required?

"Why don't you get a refund if you don't get into an accident at the end of your policy term? It doesn't seem fair to have to pay for insurance and still possibly lose your car in an accident. Shouldn't new car replacement coverage be standard in an auto policy?"

Answer provided by
Emily Maracle
Answered on Jul 28, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
“Every state has their own minimum coverage car insurance required. The reason that this exists is to not only protect others from you, but you from others.
A part of this is also ensuring you have the correct coverage on your vehicle. By adding new car replacement coverage or gap insurance, you’re making sure your vehicle is covered.
The reason why this isn’t standard on all policies is because of the cost.
Insurance claims are paid out of a pool. If everyone had new car replacement coverage, the premium pool would need to be bigger. This means everyone’s rates would be extremely high to cover potential damages.
Some insurance carriers do offer discounts for being a good driver or accident free. If you’re unhappy with your current rate, you should look into other carriers. You can use an online comparison tool like Jerry to shop for the best rates.”

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