When it comes to auto insurance, understanding what you are protecting now could prevent financial hardships later down the road. Minimum limit policies may save you money on your monthly premiums, but when they are put to the test is the few dollars saved worth it?
Many states require that drivers carry at least a minimum limits auto policy (you can read about auto liability limits here), the problem is those limits are relatively low in comparison to the actual cost of an at-fault accident where the other drivers are injured, or their cars are completely totaled. And what many drivers don’t realize is that if they are deemed at-fault in the accident, then they are financially responsible for property damage and bodily injury the other driver incurs.
While property damage is easy to assess, bodily injury can become more difficult and more costly. You aren’t just paying for broken bones, but time missed from work, duties that can no longer be performed in the home, think taking kids to school, cooking dinner grocery shopping and mental stress or pain and suffering.
Average Cost of an Auto Accident
Depending on the severity of the auto crash, will depend on the amount that is paid out. According to data collected by the National Safety Council, an auto accident where a fatal injury occurs could reach upwards of $1million, while an auto accident that leaves the other party severely disabled could be $80,000. These numbers are for initial medical expenses alone, then you add follow up care, lost wages, the other parties legal fees, plus your legal fees, the amount skyrockets. It’s easy to see your minimum limits of $25,000 will be exhausted quickly and you will be left to pay out of pocket.
That is for bodily injury alone, you also have to consider the cost of property damage. Look around the area you where you drive every day. Do you live in a city full of SUV driving soccer moms? $15,000 isn’t going to replace a Suburban or a Tahoe, it’s best to increase your limits that fit your surroundings.
Easy Ways to Protect Yourself
Even if you are thinking, I don’t have a lot of assets now; keep in mind future assets can be at stake in a liability lawsuit. Upping your auto liability limits from the state minimum to a policy with 100,000/300,000/100,000 isn’t a huge price jump and is worth the peace of mind.
If you have more assets to protect, it’s wise to consider adding a personal umbrella policy as well. Most umbrella policies will add a million dollars worth of liability coverage for a relatively inexpensive annual premium. However, can you really put a price on knowing your financial future is secure?
We are here to help, if you have any questions about your current coverage or are looking to upgrade, give us a call!