car insurance coverage

Is car insurance with minimum coverage a good idea?

Car insurance and the minimum coverage.

 

auto insurance policy

Anyone who drives a car needs to have car insurance coverage. There are different levels of coverage that people can buy, but each state has it’s own laws for the minimum coverage a driver needs to have. All drivers must have at least the minimum auto insurance coverage to legally drive a car in their state.

Having the minimum coverage will allow people to legally drive, it is not necessarily the best choice when it comes to a car insurance policy. The problem is that sometimes the state law differs from what the minimum will actually cover. There can be a lot of surprises when a person with the minimum coverage goes to file a claim. Therefore, there are several reasons to get more than just the minimum  of auto insurance coverage.

For starters, the minimum coverage level just isn’t enough. While it may be legal, there can be problems when a claim needs to be filed. The minimum might only be good for a certain amount of money in property damage. If the amount for the damage is more than that amount, then the driver with bare bones coverage is going to have to pay the rest.

So if the policy is good for $20,000 and the person hits a $30,000 car, then they are going to have to come up with the difference. People think that the minimum coverage for car insurance is the cheapest, but this is not always the case. Some car insurance companies may charge more for their minimum plan then other companies do for more comprehensive insurance. This can be avoided by shopping around. A lot of car insurance companies have commercials advertising minimum coverage. It may be easy to get, but what’s the point if it’s going to cost more than a better policy from another company? Doing a little research and making a few calls can result in saving money and higher coverage levels for car insurance. It will really come in handy in the event of a claim. When there is a car accident, there is almost always someone willing to sue. Anytime there is any kind of accident, someone tries to sue the person at fault. Car insurance is designed to cover the cost of legal disputes, but only to a certain extent with the minimum coverage.

Having minimum coverage when it comes to legal representation is not a good position to be in.

This is just another reason that minimum car insurance coverage is a bad idea. A lot of people might not think about it at first, but customer service is important when it comes to an auto insurance company. With the minimum coverage, customers usually don’t get quality customer service, especially when dealing with a company that insures all over the country. Dealing with a local insurance agent is a lot better when it comes time to file a claim.

The experience is more personal and the customer is not just a number. This can be worth a little extra money since dealing with a claim can be a real headache. Having an agent that understands the situation and takes the time to help is something that you almost can’t put a price on. Customers looking for car insurance should also look out for rising rates. The plan of the insurance companies is to lure people in with low minimum coverage prices. Then, as time goes by and the customer has to renew their policy, their rates will go up quite a bit. The insurance companies get customers in cheap, then milk them for more money. Eventually, the car insurance policy costs more for minimum coverage than a better policy from another insurance provider.

No one wants to pay that much for the minimum when they could get more coverage for less. This is why people need to take time to think about the insurance they are buying so they don’t get screwed out of money for nothing. Car Insurance Options The key to getting the right car insurance is to look around at all the options. Minimum coverage is also usually for people that have crappy cars and don’t care if they get wrecked. Minimum coverage is probably okay for beater cars that people drive when they don’t want to bring out their nice car. For instance, if someone has a fancy sports car for the warm weather and a junker for crappy days, then the junker probably doesn’t need much insurance coverage. On the other side, those with fancy new cars will definitely want more than just minimum coverage. If they can afford a nice car, then they can afford to insure it to a reasonable level. If something happens to the car, then they will be out a car and all that money because they were too cheap or too stupid to not get more than minimum coverage.

The most important thing is to get the right coverage for the right car and right situation. Sure, people can call up SafeAuto because they saw their commercial for minimum coverage, but this is not a good option. People have to compare the rates and coverage of the different car insurance companies so they can find the best deal. If this is a problem, then calling an insurance agent is a good way to get some good advice for buying the right kind of car insurance. The last thing anyone wants is to be stuck in a situation where their minimum car insurance isn’t going to cover them for an accident. Then the whole problem ends up costing way more than it would have by just getting a sensible car insurance plan. It’s not like car insurance is going to take anyone to the poorhouse, especially people that have older cars. Insuring cars like that is not expensive. So take this lesson and make sure you get more than just the minimum coverage on your car insurance. You might be thanking yourself later.

The Dangers Of State- Car Insurance Minimum Coverage

All 50 states mandate that motorists carry liability and property damage insurance coverage. However, individual states determine the minimum amounts required within their borders.

Common requirements include $15,000 per person/$30,000 per accident for liability coverage and $5,000 for property damage. Most motorists opt for these limits despite the fact that insurance carriers offer much higher limits. Of course, such people want to spend as little money as possible on auto insurance.

Doing so could cost them far more in the long run, though. The average person assumes their insurance carrier covers everything after an at-fault accident. That’s simply not true, and carriers only cover liability and property damage up to the limits specified in individual policies. From there, at-fault motorists are personally responsible for whatever damages they’ve caused.

A majority of people would agree that causing $5,000 in property damage during an accident is quite easy. Nobody wants to shell out their own money after an accident, especially when the dollar amount is a hefty one. Consider the following scenarios:

 

* A motorist backs into another automobile in a parking lot while inching out of a parking spot. Fortunately, nobody is hurt in the accident, and the other vehicle’s bumper is only scuffed. The other driver doesn’t care about the damage and tells the at-fault motorist to be more careful. In this case, the motorist doesn’t have to worry about liability or property damage claims because nothing bad happened Both motorists move on with their lives, and the only issue is some minor scratching on both vehicles. This is a best-case scenario.

 

* A motorist causes an accident while texting and driving. They strike a vehicle driven by a teenager with an early 2000s sedan worth $5,000. Unfortunately, the teen sustains a minor injury and has to be treated at the hospital. A $500 hospital bill results from this visit. The teen’s vehicle sustains $1,000 worth of damage as well. State-minimum auto insurance in all 50 states would cover this situation for both the liability and property damage in full. In this situation, perhaps the at-fault motorist’s rates rise at their next renewal – not a terrible result.

* Instead this motorist strikes a vehicle driven by a married couple in their brand new luxury car worth about $50,000. Both husband and wife earn about $50,000 annually. However, the accident creates $20,000 in medical bills for each person, and the husband is permanently disabled, meaning that he can no longer work.

The automobile is declared a total loss at $50,000. If the at-fault motorist in this case carries state-minimum 15/30 liability coverage and 5K in property damage, then the insurance company only takes care of some of the damages. In scenario three, what does that motorist then face as far as their own liability?

The auto insurance only took care of $15,000 per person, which means the motorist is still responsible for $5,000 per person, or $10,000 total, for medical expenses. Insurance handled $5,000 of the $50,000 totaled vehicle, meaning the motorist is responsible for $45,000 in property damage.

A typical person doesn’t have $10,000 in readily accessible cash, and $45,000 is out of the question for a large percentage of people. In simple terms, an at-fault motorist in this situation is screwed. Keep in mind that the husband is permanently disabled from performing his current job after the accident. If he cannot work ever again, then the at-fault driver is responsible for his lost wages. Similarly, that driver will be responsible for some of the lost wages if the husband can only perform a lesser job with lower pay.

Many people earn $50,000 per year, and that’s $1.5 million in lost wages for a 30 year-old driver expected to work 30 more years. Courts may or may not find a responsible party liable for that entire amount, but even a partial award is a lot of money. Millions of drivers operate their automobiles every day with state-minimum auto insurance. It doesn’t matter whether a state mandates 15/30/5 or 25/50/10 for liability per person, liability per accident, and property damage coverage.

These days, all of those amounts are inadequate to protect a person from being found personally liable for damages. Moderate to serious accidents could create thousands upon thousands of dollars in liability for a motorist. In rare cases, million-dollar liability situations can arise. Auto insurance is designed to protect the insured motorist from financial devastation. Motorists need to carry higher limits of liability and property damage coverage to protect themselves more so than anything else. Then again, higher coverage provides the added benefit of ensuring the not-at-fault party in an accident is covered for their losses. Everyone benefits from higher coverage limits, and the cost to raise liability and property damage is often less than a few dollars per year. It’s negligible in comparison to the overall benefits. The following limits are recommended for motorists:

* A single driver that rents a property and owns one vehicle? 50/100 in liability coverage and 100K in property damage.

* A married couple in the same situation as above? 100/300 in liability coverage and 100K in property damage.

* Any homeowner? 100/300 in liability coverage and 300K in property damage.

* A homeowner with multiple vehicles and/or rental properties? 250/500 in liability coverage and 500K in property damage. It should be noted 250/500 in liability coverage and 500K in property damage plus a $1 million umbrella policy are preferable for homeowners. In the end, motorists shouldn’t hesitate to increase their liability and property damage limits on their auto insurance. Doing so doesn’t result in gigantic premium increases, but doing so does help protect the insured long-term. Nothing is worse than causing an accident and harming other people. Far too many drivers fail to realize they could face more than mental anguish after an at-fault accident. State-minimum auto coverage could leave a driver financially responsible for far more than they can handle. Don’t let that happen to yourself!