Car Insurance as an Investment to Reduce Risk
Value investors and long term investors generally like to make money. Losing money, on the other hand, is one of the biggest threats that these investors like to avoid. In the words of Warren Buffett, the number one rule of investing is never to lose money! His second rule, of course, was never to forget rule number one.
Since investors are essentially individual people, it's important for investors to reduce financial risks in their day to day lives. With lowered risks and increased financial protection, investors are then able to have greater confidence in their investing decisions. It can be a dismal affair when an investor fails to protect themselves financially and are left to sell important assets like their family home.
One major way that an investor can increase their financial protection is to get car insurance. This kind of insurance is purchased for cars and other types of vehicles like trucks and motorcycles. The main reason that an investor should get car insurance is to ensure financial protection from physical damage and bodily injuries particularly from car accidents or other unexpected road related hazards, like natural disasters. For those astute with their money, especially value investors, car insurance is highly important to protect against liability that could come from an accident.
There have been several liability cases in the United Kingdom where people were expected to pay out hundreds of thousands to even millions of pounds of compensation. If this were to happen to you, your financial assets would be at risk, including all of your value investments that you built up over the years. Car insurance gives you greater peace of mind because the insurers would be the ones to handle all or at least most of the compensation payout. This would mean that your personal assets are protected.
According to the Office for National Statistics in the UK, there were 111,320 total accidents on major roads in 2002. While there were 221,751 total accidents on all roads combined in 2002. These are staggering figures, and demonstrates the importance of car insurance to not only protect your finances but also to protect your car from damage and your body from harm. In fact, car insurance has been recognized to be of upmost importance in the UK that the government recently passed a new law in June 2011 which asserts that all vehicles must have a valid insurance policy if kept on public roads.
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