What To Think About When Buying Car Insurance
As a lawyer who represents people hurt in car accidents, I spend a lot of time dealing with insurance companies and insurance policies. If you are injured in an accident or you injure someone else, it is very important to have the right amount of coverage.
Choosing A Company. I believe it is important to have an agent who will help you choose the right coverage. Some companies have their own agents. Independent agents represent a number of companies and may be best placed to get you the right coverage at the right price. As with any purchase, it is worth shopping around.
Choosing Your Coverage. All companies can provide similar coverage. Companies price their policies differently for different insureds. That is why any number of companies can run ads saying people who switch to them save money.
There are basically three types of coverage: (1) liability coverage, which protects you if you cause an accident and someone else is injured; (2) uninsured, underinsured and medical payments coverage, which protects you if you are injured in an accident; and
(3) collision and property damage coverage, which insures your vehicle.
This article will focus on insurance which provides coverage for injuries. Since the terms of coverage under most policies are similar, the big question is how much coverage you need.
- Liability Coverage. Like so many things in our society, the cost of medical care is a big factor in this decision. We routinely see medical bills of $10,000 – $15,000 even from relatively minor accidents. Bills in excess of $100,000 are unusual but a real possibility. When deciding how much liability coverage you need, the first question to answer is what do you have to protect? If you have significant assets, then you will likely need at least $100,000 per person and $300,000 per accident in underlying liability coverage. You should also consider an umbrella policy, which is a relatively inexpensive way of purchasing a much higher coverage limit. The minimum required limit in our state of $25,000 per person and $50,000 per accident is not adequate for most people. Increasing it to $100,000/$300,000 is usually not terribly expensive.
- First-Party Coverages Are Those That Protect You. Uninsured motorist coverage is required on every policy. Your uninsured motorist coverage protects you if you are injured by someone who does not carry insurance, something that is very common. Both uninsured and underinsured coverage are relatively inexpensive. The amount you want is up to you, but I would recommend a minimum of $100,000 per person and $300,000 per accident.
Underinsured motorist coverage is not mandatory coverage, but you should purchase it. This coverage protects you if the person who injures you has insurance, but it is not sufficient to pay for your injuries. Given the fact we have $25,000/$50,000 minimum coverage in our state, this is a common occurrence. You should understand the amount of your underinsured motorist coverage will be reduced by the amount paid by the company who insures the other driver. Again, I believe a $100,000/$300,000 policy is the minimum you should carry, and you should seriously consider purchasing more. If you purchase an umbrella policy, ask the agent if it includes underinsured motorist coverage.
- Medical Payments Coverage. This should be at least $10,000. If you have health insurance, that will pay for the medical bills incurred as a result of an automobile accident. The medical payments insurance can be very useful in taking care of costs that are not covered by your health insurance.
All of these are brief rules of thumb. You should review your situation with your agent. In my view, it is helpful to get a written recommendation from the agent. It is also worth asking the agent if he or she can be of help if you have a claim to present. Agents can often be quite helpful in navigating the system if you need to make a claim.
Hopefully, you will never need to use your automobile insurance. If you do, you will quickly discover how important it is to be adequately protected. And if you find yourself in that situation, Axley is always available to provide advice.
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