0
Just like any other insurance the purpose is to transfer your risk of loss to the insurance company. The company is merely like a large co-op. It is almost impossible when you will have an accident and how much the damages will cost. However, when you have a large number of people, a company can make estimates on how many will have accidents and how much the damages will pay out. This is done by the law of large numbers. The company takes your unknown risk and replaces it with a know certainty. The know amount is the premiums you pay and the unknown risk of when you will have an accident and how much it might cost.
Still curious? Ask our experts.
Chat with our AI personalities
BlakeAs your older brother, I've been where you are—maybe not exactly, but close enough.
Chat with Blake
TaigaEvery great hero faces trials, and you—yes, YOU—are no exception!
Chat with Taiga
LaoThe path is yours to walk; I am only here to hold up a mirror.
Chat with LaoAdd your answer:
Earn +20 ptsQ: What is the purpose of purchasing auto insurance?
Write your answer...
Submit
Still have questions?
Trending Questions
Why the driver sit on left side?
How much horse power does an army tank have?
If someone hits your car and you have pl-pd insurance will their insurance cover your car if they were totally at fault?
What are the best mid-size SUVs?
How much 2 cycle oil to one gallon gas for 40.1 ratio poulan weed eater?
When do you use overdrive while driving a 2002 Lexus RX300?
How often is skeleton replaced?
How much liability does a 59 year old need to carry?
How do you i set injectors on cummins vt 903?
Is there any car games that will let you drive around with no time limets?
Who is Bishop Ford and what does he do?
Did they have cars in the 1900?
Is a drunk driver always at fault in an accident?
Who took over Praetorian Mutual Life Insurance Company?
What kind of car does Henry Rollins drive currently?
Can someone else buy insurance for a lease car?
What if auto insurance was canceled before your accident?
Are air bags useful if your car is struck from behind by another vehicle?
How fast is 3000 kmh in mph?
How many feet square is an acre?
Copyright ©2025 Infospace Holdings LLC, A System1 Company. All Rights Reserved. The material on this site can not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of Answers.