Car insurance coverage, in it's simplest terms, is 'shared risk' or 'spreading the risk'. It's something that nearly everybody needs (and buys) but nobody ever wants to have to use. This brings to mind an old saying... "It's better to have it and not need it than to need it and not have it." It's true.

In most countries (though not all) automobile insurance is required by law. South Africa is one of the notable exceptions. Having insurance coverage for your automobile is not legally mandated here although, most would agree, it's still a wise choice. Here's why.

Even if you're a good and safe driver the chances are the guy driving next to you (or coming head-on from the other direction) may not be. If you become involved in an accident, even though it's not your fault, someone's going to have to pay for damages. If the other driver is uninsured guess what? Yep, you're on your own. Having a good auto insurance policy in force will protect you from being 'out-of-pocket' in this eventuality. Your insurance company will pay the bills.

Insurance companies are experts in spreading risk. Of all their policy holders on the books, they know (statistically) about how many will make claims during any given time period. Their premium costs (rates) are based on this information and it's all very scientific. Their most expensive policies (comprehensive) cover the largest amount of risk because they offer protection for the most possible scenarios (perils).

While auto insurance may not be required where you live it IS required if you're financing the car. All borrowing institutions want their interest in the car protected against any eventuality and, thus, they will insist you obtain full, comprehensive coverage. These policies will pay claims relating to theft, accident damage, acts of nature, and even hi-jacking. They will also include bodily injury and third party damage (liability) protection.

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!