Most of us opt for our state’s minimum coverage when it
comes to insuring our vehicles. But are
we doing ourselves a favor by choosing only the most basic coverage in order to
save on insurance premiums?
The experts say no. While basic coverage is better than
driving without insurance, the truth is that it usually isn’t sufficient to
protect you if you have a serious or catastrophic accident. These types of
accidents frequently result in damages that exceed minimum coverage limits.
In cases where you’re found at fault in a collision with
injuries to other parties, you could find that your liability far outweighs the
amount of coverage your bodily injury insurance provides. Accidents with
moderate to serious injuries can easily cost in excess of $100,000. If you
don’t have sufficient coverage, you’ll be liable to pay damages out of your own
pocket after you’ve exhausted your insurance company’s limits.
Property damage and bodily injury insurance pay for the
other driver in a crash, should you be found at fault in an accident. The average minimum limit varies from state
to state. On your policy, this coverage shows
up as three numbers. For instance, according
to Edmunds http://www.edmunds.com/, in
Nevada it’s 15/30/10. That means that each
accident has bodily injury coverage of $15,000 per person, and $30,000 per
accident, maximum. The last of the three numbers refers to the amount of
coverage for property damage, which in this case is $10,000. Other states such
as Wisconsin have significantly higher minimums. Wisconsin’s is 50/100/55, which translates to
$50,000 per person and $100,000 per accident for bodily injury and $55,000 for
property damage. But even the higher coverage is barely enough to protect you
in the event of a serious or catastrophic accident.
To give an example, say you’re found at fault in an accident
that injures two people in the other vehicle.
Even if the injuries aren’t catastrophic, their bills for hospital and doctor’s
bills could easily amount to a quarter of a million dollars, which could leave
you exposed to the tune of $150,000 if your bodily liability coverage is
$100,000 maximum per accident. If
someone dies in an accident, claims routinely go up to a million dollars or
more. That doesn’t include the cost of the
lawyer’s fees you’ll have to pay to defend you.
The bottom line is that state minimum auto insurance
coverage will not be adequate to cover you if you’re at fault in a serious or
catastrophic accident. If damages exceed
your coverage, the injured parties will go after your assets, which include
your home, bank accounts, and essentially all of your personal property. In
some cases, they can attach your wages to collect damages.
The good news is that the cost of doubling or tripling your
auto insurance coverage is usually pretty inexpensive. In many cases you can do it for as little as
$10 or $20 a month. Especially, if you
have assets that you want to protect in the event of an accident, this is money