In its simplest terms, car insurance is the spreading of risk among many people. An insurance company's policy holders all pay a little to the pot, the proceeds of which are used to pay claims for the unfortunate few who find the need to use their policy. While most motorists possess auto coverage, it's something none of them ever want to have to use. But it's there if they do!

Most countries have laws requiring drivers obtain vehicle insurance coverage. There are some notable exceptions (South Africa being one). But even though having insurance on your car may not be legally required most would agree that it's still a good idea. Here's the reason why.

Even if you're the safest driver in the world you're still out on the road among many others who may not be so diligent in their driving technique. Like they say -- accidents happen. An insurance policy 'spreads the risk' of your having an accident between ALL the policy-holders your particular insurance provider has currently underwritten. Not every one of them is going to make a claim (of course), and the policy issuer knows the statistics and the odds of approximately how many WILL be making claims.

Their system is very scientific and allows them to determine how much premium to charge a policy holder for each specific type of coverage issued. The most popular (and most expensive) policies are called 'comprehensive'. As the name implies, this type of policy covers a wide range of 'comprehensive' perils.

Even if carrying insurance on your car isn't required by law it IS required by the financial institution lending you the money to make the auto purchase. They need to protect THEIR interests against a mishap involving the vehicle they're financing. They'll require that you obtain a comprehensive cover. This provides protection from accident damage, hi-jacking, theft and various natural disasters. You will also be covered for bodily injury and, most importantly, third party damage.

If you drive an old beater, comprehensive might not be your best bet. The additional premiums charged for vehicle replacement (in case the car is 'totaled') may be a waste of your money, especially if the car isn't worth replacing! Lower cost policies exist which cover the all important liability aspect, which protects you if you're sued for damages by a third party. EVERYONE driving should have this minimal coverage at the very least. An uninsured motorist causing a serious accident can be ruined financially.

These days the easiest and most efficient way to find the right auto insurance coverage for your particular needs is to go online and shop around. All the established companies have websites up and running and these can be quite informative. 'Aggregator' sites exist that enable you to enter your personal data just once and they will reply with numerous, competitive price quotes from various companies. The Internet makes comparison shopping quick work.

Of course, as with most things, the lowest priced product isn't necessarily the best deal. Policy terms vary. Some include limitations or exclusions that should be understood before signing on the dotted line. All the info is available and easy to find. It's time to do your homework!

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