Auto Insurance Rates: Learning From Japan’s Tragedy


The recent natural disasters that struck Japan were beyond anyone’s expectations. The earthquake and tsunami left immeasurable damages to both life and property. Assessing the cost of the disaster is often very difficult to evaluate as it affects nearly all angles in Japan’s economy.

Japan’s destruction serves as an eye-opener to all policyholders out there. In times like these, finding cheap insurance policies will be next to impossible. Understanding the implications of natural disasters should help the driver stay protected at all times. By knowing the possibility that some ‘Acts of God’ could wipe out your investments in no time, will help anyone’s insurance cost be in control.

When an earthquake strikes, all policyholders under a comprehensive coverage are eligible to file insurance claims. If the effects are wide-ranging, the influx of claimants could swell in just a few days. Under the law, insurance providers are obliged to pay for all valid claims.

Insurance claims cost money, and we are not just talking about a few thousand dollars here. Just think how much the company would have to pay if 500 or 1000 policyholders are filing claims, all at the same time. To compensate with the lost income, insurance providers often raise their premium rates. Apart from pricey policies, insurers could also limit its issuance in order to limit the risks and recover from the recently made massive payouts.

Economic destabilization after a natural disaster will likely to occur due to the great losses suffered by every single industry in the affected area. Auto insurance providers depend on bank loans to operate and issue policies. During a major catastrophe, these resources become scarce. As a result, the rates go sky-high and only very few policies are written.

The effects to the economy are similar to that of massive claims, but instead of affecting individual companies, the state’s economy is affected in this case. It’s worth noting that large business organizations can become isolated and can readily withstand from such economic challenges. The earthquake in Japan is sending a strong message to all drivers to look and assess if comprehensive insurance policy is what they need. While this policy costs money, the protection it provides far outweighs the cost disadvantage.

The disaster may or may not affect you directly. However, one thing is for sure, and that is cheap auto insurance coverage is becoming barely adequate elsewhere. Drivers who are looking for reasonable rates must work double time to find them or use online sites that facilitate the acquisition of multiple insurance quotes from various companies. By simply comparing which ones are offering the desirable coverage and rates, one arrives at an informed decision. What happened to Japan will ultimately affect the insurance market in the world. As of today, no one knows when it will hit us. It could be in the next few months or years.

Only a comprehensive coverage is able to protect you from all car related accidents except collision. If you recently acquired a new vehicle, this policy is necessary. If not, I suggest you contact your insurance agent right away and know the other details about comprehensive protection.