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Insurance is Not a Bad Word

Written by Todd Clay. Posted in Definitions Last Updated: 08/13/2017

Insurance offers us financial protection and stability in the event of an accident; it is not the unnecessary evil that some people make it out to be.

A Broken Nest Egg Without Insurance

Without insurance, you would have to use the money in your nest egg to pay for accidents.

If the word insurance had fewer letters it would be classified as one of those bad four-letter words by most. People hate insurance, they don’t want to buy it and most feel it is a legal scam. But, the idea of insurance is not the evil entity that it is made out to be.

It is bad-intentioned people that give insurance its bad reputation. Just like the saying “Guns don’t kill people, people kill people”.

Few people understand what insurance really is, how it protects them and also that it has a long rich history of our ancestors voluntarily creating it. All they see is that they are required to have it and it is another bill that they have to pay.

What is Insurance?

Insurance is defined in technical terms as the transfer of risk from one party (you) to another party (insurance company) in exchange for money.

Okay here is that definition in plain English: You are paying the insurance company to accept the responsibility of paying for any damages that may be caused to your vehicle or by your vehicle. Of course, what the insurance company pays for depends on the insurance coverage that you buy.

What Are the Benefits of Insurance?

Insurance protects people from financial destruction. This is the only reason to have insurance and is the only reason that it was created.

You purchase insurance on your vehicle so that the insurance company will pay for the large bills that result from an accident. Bills for things like car repairs and seeking medical treatment.

These bills can get to be so big that you most likely can’t afford to pay them. If you had to pay for these bills out of your own pocket, you would lose everything that you owned and be in debt for the rest of your life.

On the other side, insurance also financially protects the people that you do damage to. Because your insurance company pays to repair the other person’s vehicle and their medical bills, they don’t have to try and come up with the money themselves or wait for you to pay it.

Without insurance protection you are putting not only yourself at risk of financial ruin, you are also risking the financial stability of others.

Where did Insurance Come From?

Insurance was first created to protect companies in the shipping business. Merchants got together and put up money to protect cargo while it was in transit to where it was to be sold. The first record we have of this is from China.

Insurance today is still used in the same way by businesses, but has become a business field of its own. Like any other field, companies expand and look for new products to sell to the public. This is why we now have so many different types of insurance available to us.

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Todd Clay

Todd Clay is a former insurance agent with the largest insurance company in the United States. He earned his Bachelor’s from the University of Texas. He’s worked in several fields but has specialized in insurance, financial-related information, and technology. He blogs at Car Insurance Guidebook.

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