Why doesnt insurance carry over if you haven't gotten into an accident?

Answer 1

An Insurance policy is a contract. The contract renewal has nothing to do with the activity of the policy. Most policies are automatic renewal, as long as the premium deposit has been paid. It is in the best interest of the buyer of the policy not to have a policy carry over as this is a good reminder for you to review our coverages and possibly shop for cheaper or better insurance coverage. Also keep in mind that there are people who have claims that far exceed the premiums that they have paid. This means that in order for the insurance company to remain solvent there must be people who pay insurance premiums year after year without filing claims. The principal of insurance is that you exchange a known loss (your premium) in exchange for coverage of an unexpected loss (accident). Some states will allow you to self insure by posting a bond but you would have to tie up a significant amount of money and in the event you caused the accident your bond would be used to pay that claim. On the otherhand if you don't have any claims then maybe someday you could get your bond money back. Are you willing to take on that risk?