It is not predictable what dreadful incidents are about to befall, what hazard is coming forth. People, therefore, plan for mitigation to recover their properties, even their lives. Insurance! This is the most popular and clever plan for mitigation.
According to Google definition, “Insurance” is an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium. There are various types of insurance policies such as Agricultural insurance, Health insurance, Life insurance, Auto insurance and so on.
According to Investopedia, “Auto insurance is a policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident. Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage”. Investopedia further explains Auto insurance premiums, or the amount policyholders pay to be insured, vary depending on: age, gender, years of driving experience, accident and moving violation history, and other factors. Most states mandate that all vehicle owners purchase a minimum amount of auto insurance, but many people purchase additional insurance to further protect themselves. A poor driving record or the desire for more complete coverage will lead to higher premiums. However, you can reduce your premiums by agreeing to take on more risk, which means increasing your deductible.
It is true that auto insurance is a clever plan but a question rises what about those who cannot afford paying premiums, just could afford a car that also paying in installments. Even the insurance companies are said to charged high premium cost for the poor, which is very unfair. According to Brad Tuttle’s article in “Time” entitled as “Study: Poor People Pay More for Auto Insurance”, 2012, he has written Low-income drivers are routinely charged higher auto insurance premiums than well-heeled car owners. After his examination of tons of literatures on auto insurance, the study’s authors call attention to several factors that aren’t taken into account by insurers, and that should, in theory, lower the risks for low-income drivers.
Thus, insurance companies should also have some fair schemes focusing on the poor and low-income people.
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