For a lot of us, it is exceedingly difficult to justify spending money on something that we will probably never use. But we all do it and we do it more often than we would like. Yes, we all spend large amounts of money on insurance even though we all know that we will probably never use it for anything. While it is true that health insurance and dental insurance do indeed come in handy, it is much more difficult to see the reasoning behind dropping thousands of dollars each year on home and auto insurance.



So why do we spend so much money each year on home and auto insurance when we will probably never end up using it? The answer lies in a seemingly simple series of questions.

Some make the decision to have an insurance based on the family, that is they want to protect their family against death, illness, disability and any cost affected by the accidents. For example, if we die, insurance will provide a surviving spouse and our children. It can help our family to cover the living cost.

Why do I need car insurance? The obvious answer to that question in Canada or the United States is very simple. It is the law! If you own a vehicle that is being driven by someone, even if it is not you, the vehicle must be insured. The main reason for the law is to guard against drivers causing injury to others and having no reasonable means to compensate the injured party financially.

Further, most, if not all, Canadian and American insurance companies have a minimum liability. In today's standards, a million dollar liability does not go very far if someone is injured or there is major public damage. To prevent buyers from choosing cheap, mediocre insurance, a minimum is usually required by the insurer and possibly the province or state.

We have come to an age where insurance policies have become an integrated part of our lives. Insurance acts as a shield that protects us from the contingent financial losses from the unfortunate events of the future.

The life insurance policy covers the risks associated with the life of the policy holder. The insurer promises to cover the financial losses attached with the untimely death of the insured. The benefits of the policy are then paid to the family of the decedent insured in lump sum or in the form of annuity.

I understand why we need to have proof of ownership of our cars so if we are pulled over we can prove it's our car. But why do I get a ticket for not having proof of insurance? The only reason we have insurance is so we don't have to pay when we get in an accident that isn't our fault, as long as the contract covers it. But if I have the money to pay for any accident I'm in, both my expenses and the other parties involved, then why do I have to have insurance?

We are living in a world with skyrocketing growth in population especially in the developing nations like India and China (top 2 population countries). We have also been on our way towards global development. Automobile has been one of the industries continuously on the track of consistent growth. Number of cars on road is always increasing which makes crashes a very realistic possibility. Even if you are a very safe driver it's not possible to avoid accidents completely. Accidents result into emotional and financial trauma. Although we can not compensate the emotional set back, still we can compensate our financial losses with Auto Insurance.

As the economy has evolved, insurance markets have become more diversified, more efficient, and more accurate in assessing risk. Today, consumers have a wide variety of options when shopping for insurance, which has become a major industry in the United States, with revenues of roughly $800 billion and net income of around $40 billion annually. Numerous brokers and agents supply a wide variety of products to meet the needs of consumers. At the same time, insurance instruments are available from a greater number of sources, including self-insurance and financial services providers. Where allowed, competition has generated the results that would be expected in any competitive market - lower prices, a wider variety of goods and services, and more fully informed producers and consumers who can make more knowledgeable decisions about the insurance products they need. Nonetheless, insurance markets in most states remain heavily regulated, which raises costs for consumers.