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Why do I discourage folks from getting state minimum insurance coverage? I can answer that by simply explaining what all those weird numbers mean on your auto policy!
Bodily Injury Liability: If you are at fault in an accident, and someone is injured then it is used to pay for the injuries.
- State Min bodily injury is $25,000/$50,000
- This means you would have $25,000 to cover injuries to one individual, and a max of $50,000 for all that are injured.
Property Damage: If you are in an at fault accident, this is the amount that’ll be paid to repair the other person’s vehicle. The average new car costs approximately $49,000 (although many are much more).
- State Minimum property damage coverage is usually around $25,000. In some states it can be as low as $10,000.
Let’s say you are in a severe at-fault accident with state minimum coverage, and you cause multiple injuries that cost a combined total of $300,000 in medical costs. You also caused about $50,000 in property damage to their somewhat new Ford Explorer.
- You only have a max of $50,000 to cover bodily injury so you would owe the injured party $250,000.
- You only have $25,000 to cover property damage, and you totaled their vehicle. So, you will owe them another $25,000.
It isn’t uncommon for people to say to me, “Well I don’t have that much money…so they won’t be able to get it.” Us old folks would say, “You can’t get blood from a turnip!” And that is far from the truth.
On the insurance policy you also have uninsured/underinsured motorist coverage. When someone is hit by an under insured or uninsured driver, their insurance company uses the coverage to pay for the damages. However, insurance carriers will then try to recover the amount they paid on behalf of their client, and they do that by:
- Getting in touch with the underinsured driver, and requesting they pay for damages.
- If the underinsured driver says they don’t have it, the victims insurance carrier will likely file a lawsuit. I am unsure on the different state laws, but I’m guessing they can garnish wages until they are paid.
For many years the lowest amount of bodily injury coverage that agents would recommend was $100,000/$300,000 and $100,000 for property damage. I personally have $500,000/$500,000 for bodily injury with $100,000 for property damage. I also carry a 1 million dollar umbrella. I do this because I don’t want to worry about money if my 21 year-old son or I cause an accident. And according to my son, I am the worst driver he has ever seen. So, there’s that!
If you have questions or need a quote feel free to email me at Tony@tonyrussellinsurance.com or fill out the information at www.quotefromuncletony.com
Thank you!
