Car insurance is a necessary expense for every car owner. It provides financial coverage for any damages or injuries resulting from an accident. However, with the continuous spike in car insurance costs, many people are resorting to “self-insuring” their vehicles. Self-insuring means that car owners do not purchase insurance but instead assume the risk of financial loss resulting from any accidents they may cause.

According to recent studies, car insurance costs have risen by approximately 14% in the last year. This surge in prices can be attributed to various factors such as increased costs of repairs, medical expenses, fraud, and others. The unpredictable economy due to the ongoing pandemic has also played a role in this increase.

With the increase in costs, many car owners are feeling the pinch and are seeking alternative options. Self-insuring has become an attractive option as it allows individuals to determine the amount they wish to save each month while also assuming the risk of any financial loss.

However, this approach is not always advisable. In the event of an accident, self-insuring can result in significant financial losses. Most drivers do not have enough savings to cover the cost of repairing or replacing a vehicle, paying for medical bills or legal fees.

Moreover, those who choose to self-insure also forego the legal protection that insurance provides. This means that they may face stiff penalties and fines under the law, which can significantly affect their financial stability.

In the end, choosing to self-insure is a personal decision that requires careful consideration. Before deciding to take this route, it is advisable to consider the potential financial consequences, as well as the legal risks. If self-insuring seems like the best choice, ensure to put away sufficient savings that can cover any expenses that may arise in the future.

The average American is now spending $2,014 a year on car insurance, according to Bankrate. What’s behind this increase and why are more drivers insuring themselves?

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