When It Comes To Auto Insurance, How Much Is Enough?
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 well spent.