Why You Need More Than Just State Minimums on Your Car Insurance

Auto insurance is one of those necessities in life.  It’s something you need, but hope you never use.  If you are fortunate, you can go through your whole life and not use it, even though you have paid for it all those years.

Most of us have been in a car accident in our lifetimes.  Some are minor, that you can drive away from, and others are more serious, where you leave the accident scene in an ambulance

The amount of insurance coverage you get can varies.  You choose how much coverage you want and pay accordingly. In some states like Pennsylvania, there are minimum coverages you need to have in place by law.

Insurance is designed to protect you in the event of an accident. Different parts of your policy cover your liability if you injure others or damage someone’s property, medical payments, and damage to your vehicle.  This coverage continues past the initial events and results of an auto accident, and protects your assets  for the years ahead.

However, if you don’t have enough coverage, particularly liability coverage, one auto accident could wipe out your entire retirement savings, plus any other savings you have – like children’s college savings and investments.  The proper coverages can keep that from happening.

When money is tight, people look to their premiums as a way to reduce expenses.  A premium for a minimum liability coverage of $25,000 per person and $50,000 per incident, may be less than a premium for $100,000 / $300,000. Some large companies have a small difference between the higher and lower premiums. However, with companies that specialize in discounted insurance, the difference between the lower end premium and higher end premium can be significant.  Thus, encouraging the insured to go with the lower premiums.

With hospital stays that can range from $12,000 to over $100,000, auto repairs that can run over $50,000 if a high end vehicle is damaged, and lawsuits that range in the hundreds of thousands of dollars, a minimum liability coverage won’t be adequate, and the person responsible for the accident will have to pay the difference, out of their savings, retirement, child’s college funds, or garnished wages for the next 20 years.

Premiums should not be the place to cut corners. Take a look at the bigger picture of what you would lose overall, and not just the difference in premiums.  I often heard insurance customers say “I don’t plan to be in an auto accident.”  To which I often replied, “The next time you visit a friend in the hospital who was hurt in an auto accident, and they are pretty banged up, ask them how well they planned their accident”

Here is something to consider: of all the conversations I’ve had with people who are recovering from an accident, whether in the hospital or at home where they are missing work, I have never heard someone say “I’m so glad I saved money on my insurance premiums.”

Will Schirmer is an educator and solution provider, taking the confusion out of the Medicare Enrollment Process.  Will’s knowledge of insurance also includes home, auto, health, accident, and life insurance, and his fascination with and knowledge of cars and new automotive technology transcends beyond his days as an auto salesman.   For fun, Will likes watching classic movies, rebuilding old stereo systems, and of course, writing.  Contact Will at will@willschirmer.com