It is common belief among most car insurance policy holders that in the event of a claim, they will make big profits from the compensation they receive from insurers. Nothing can be further from the truth.

Insurance is not about the policyholder making money from their misfortune and it is important to appreciate the fact that if your old car is completely wrecked in an accident, it is wishful thinking to expect the insurance company to replace it with a brand new car. Once you understand this, it will save you lots of heartache and disappointment in the event of a crash.

In spite of faithfully paying your premiums, if your vehicle is badly wrecked in an accident, the insurer has to consider the issue of betterment and depreciation or the wear and tear of the car since it was first insured. In reality this means you will have to top up the difference to get back the car you had when you first insured, let alone a brand new one.

Insurance is about protection and not profit, a fact many policyholders fail to appreciate yet it is the basic insurance principal not only for cars but everything that has to be insured.

The general idea here is to try and make things the way they were before the accident and not to enable you make a killing after an accident. If that was the case, The temptation to cause an accident for the sake of making a profit would just be too great.

It is therefore totally unrealistic for you to expect an insurance company to replace your five-year-old jalopy with a new one in the event of a serious accident, that's not what car insurance is all about.