When it comes to car insurance, there is a lot of information that people do not know. In this article, we will discuss five things that you might not have known about car insurance. For example, did you know that car insurance can help protect your assets? Or that you might be able to get discounts on your rates if you are a good driver? Read on to learn more about car insurance and what it can do for you.
Car insurance is there to protect you financially in the event that something happens to your car. Whether it’s a fender bender or a serious accident, car insurance can help cover the costs of repairs or replacements. In some cases, car insurance can even help cover the cost of medical treatment for injuries sustained in an accident.
Most people are required by law to have car insurance. However, the amount of coverage you are required to carry may vary depending on your state or country. In some cases, you may be able to get by with only liability insurance, which covers damage you cause to other people or property. In other cases, full coverage insurance, which covers both damages to your car and damage you cause to others, may be required.
Some basics about car insurances first
There are a number of factors that affect the cost of car insurance. Your driving record, the type of car you drive, your age and gender, where you live, and even your credit score can all play a role in determining your rates. In general, however, there are a few ways to save on car insurance.
One way to save on car insurance is to shop around. Insurance companies use different formulas to calculate rates, so it pays to get quotes from several companies before you purchase a policy. You can also get discounts for things like having a clean driving record, being a good student, or taking defensive driving courses.
Another way to save on car insurance is to choose a higher deductible. A deductible is the amount of money you would pay out of pocket before your insurance kicks in. By choosing a higher deductible, you can lower your overall premium. Just be sure to choose an amount that you would be comfortable paying if you had to make a claim.
Car insurance is an important part of owning a car. By understanding how it works, you can make sure you are getting the coverage you need at a price you can afford. Keep these things in mind when shopping for car insurance, and you will be sure to find a policy that fits your needs.
Some insurance facts that you might not have heard about before
Beyond the basics, we also checked some facts that might not be as well known. Here’s a list of some curious aspects that might be new to you.
History of car insurance
Cars became an increasingly common method of transportation after the first world war around 1918. At that time, there was no kind of mandatory car insurance around in any country even though the vehicles were fast, dangerous, and drivers were mostly unskilled since nobody could have much experience in operating a vehicle that hadn’t been around for long.
The first country to make it compulsory for car owners to have insurance was the United Kingdom which signed the Road Traffic Act 1930. The next country was Germany, and the government here made it a requirement for car drivers to have insurance starting from 1939, followed by others later on after the end of the second world war.
When was insurance invented in general?
Insurances are a financial concept that hasn’t always been around. While cars have only been with us humans for a relatively short time, speaking in historical dimension, the desire to secure and insure one’s goods, assets, and generally to reduce the risk of a financial impact due to unplanned accidents or disasters goes way back. While the concept of insurance cannot be traced back to a single individual to credit for this invention, there is evidence that insurance contracts could be dated back as far as 1792–1750 BC in the first Babylonian empire.
It’s also worth noting that traders in ancient Babylonia, China, and India who had rivers and torrents on their trade routes would get a sort of insurance policy on goods that would be lost in case a wagon or boat would capsize along the way during the 3rd and 2nd millennia BC. In ancient Greece and Roman societies, around 600 BC, there were certain benevolent guilds that managed funds that would support families in case the provider of a family would have been deceased. The family would then be able to survive, with the help of such funds, rather than becoming beggars or dying.
As guilds and similar organizations matured over time both in economic and societal aspects, the concept of insurance also developed more towards how they work today. After the medieval ages, guilds turned into early versions of what we know today as banks and other financial institutions and led the early modern history of insurance.
Who was the first person to get car insurance?
If we can believe the records of the Ohio History Connection, the first person to get car insurance was Gilbert J. Loomis, and his 1897 policy was to cover damages to the vehicle as well as costs in case a person would be injured in an accident. Are you wondering, “why is my car insurance so expensive?” Loomis paid $7.50 at that time, which is the equivalent of $238 if it happened today. Loomis would later found the Loomis Auto Car Company in 1900 and manufactured cars until 1904. Maybe he was not that successful in this venture, but he had a good idea about getting insurance for his car.
Why do insurance companies check your VIN?
VIN means vehicle identification number, and it’s an ID number that is embossed into key frame parts of a vehicle in order to identify it and be able to trace a vehicle’s origin even if parts were taken apart and swapped with other vehicles. It’s possible to get an insurance quote by VIN today because this ID number allows an insurance company to better understand data that would correspond to yourself or the vehicle that you want to insure. VINs are important to car insurance companies because they help to identify the vehicle and its owner.
VINs are used to track recalls, repairs, and other important information about a particular vehicle. Car insurance companies use this information to determine rates for car insurance policies. If an insurance company is unable to properly identify a policyholder and their vehicle, it can have a significant impact on the company. Without the correct VIN for a policyholder, an insurance company may not be able to properly research and understand the risk associated with that particular policy. This could lead to increased rates or even the denial of a claim.
Who insures an insurance company?
Believe it or not but insurance companies are masters in financial risk management. This helps them to plan their policies and pricing with the aim of being profitable. But if both regular people and companies get insurance from insurance companies, which insure the insurance companies? There are some organizations that we know as reinsurance companies, and this is precisely the service they offer.
Companies such as the Munich Reinsurance Company, Swiss Re, Hannover Rück, SCOR, or Berkshire Hathaway are reinsurance companies that hold enough funds to provide the coverage for even insurance companies in case they have to make a series of high-volume policy payouts without having expected such a loss beforehand. For this kind of peace of mind, naturally, just like a regular insurance customer, they have to pay a recurring fee in order to keep such protection active.
Closing thoughts
What did we learn from these facts? We learned that the human desire for peace of mind and financial risk mitigation is as old as trade and currency itself. We learned that even among the first car owners, there were smart ones who paid for an insurance policy even decades before it started to become compulsory in some countries. We even learned that an insurance company has a larger insurance company behind them to cover them, just in case. I hope you found these interesting and make sure you visit us again soon for more facts.
If you want to learn more about how insurance companies can stay profitable and how everything works, make sure you also watch the featured video below by The Infographics Show.
YouTube: Insurance Explained – How Do Insurance Companies Make Money and How Do They Work? (The Infographics Show)
Photo credit: The feature image has been done by Ross Kummer.
