In an effort to help you the consumer be more aware of what really happens with your insurance premiums, I want to make sure you understand what happens when the real world collides with the insurance world.
Hypothetical, or Example:
Suppose you are in South Carolina driving your beautiful wife and young child to church one morning when suddenly and without warning a drunk driver passes out at the wheel behind you and plows into your vehicle causing serious personal injuries. The drunk driver stumbles away from the scene but is later found at the convenient store nearby trying to buy beer. The police come do an investigation as you and your family are taken off by EMS to a nearby hospital and you eventually get to talk to the trooper that investigated the collision. The trooper indicates the driver was arrested for drunk driving (the driver's 4th), driving under suspension and disorderly conduct. He will probably be released from jail soon since no one died and since he doesn't really have any money, the fines will be a moot point. Drunk driver has no insurance on the vehicle because he could not afford it and lives in a van by the river (so no assets).
1) Who pays for the medical bills, damaged property, permanent scarring, surgeries, and months on end of an altered lifestyle all because of this idiot?
2) Do you think the EMS transportation, medical services, car dealership, towing company, plastic surgeon, therapist, and rental company all will work for free out of the kindness of their hearts?
1) In the state of South Carolina the law is that every driver must carry liability insurance and uninsured insurance to drive on the roadways in the state. That is it. Any additional coverage is up to you and what you are savvy enough to get with the right insurance company and agent.
So using the hypothetical above, the family injured would have to file a claim against their own automobile insurance company to try and be reimbursed and brought back to the position they were in before the drunk driver ever struck them.
Do you think that means your own insurance company will bend over backwards to help you OR do you think that means your own insurance company that you pay the premiums on will stand in front of the drunk driver and work against you to minimize what you receive? Let me answer that for you...the later.
What if you have to file a law suit? Who represents the drunk? Well your insurance company provides an attorney that will look to be representing his interest and would actually sit at the drunk's table in front of the jury at a trial.
That is why it is important to get a good insurance company focused on its members instead of a poor insurance company focused on their bottom line. In my opinion the top poor insurance companies are Allstate, Esurance, Safeco, and Direct General. It doesn't mean your insurance company is great if I didn't just list it, these are just the worst.
2) No those services are not free and they will send you to collections if you do not pay them within 90 days regardless of who is at fault. They provide services and they want their money for those services.
Stay tuned for more real life scenarios. To better educate yourself on insurance read these posts.