Many people use the Internet to purchase automobile insurance, but often they don’t really understand what they are buying and are just basically price-shopping. Others rely on their insurance agent to suggest the appropriate limits to carry but a careful and detailed review of your policy may save you dollars or–for not much more money–may give you a lot more protection.
Liability Coverage
The minimum policy limits everyone is required to carry in California are 15/30 liability and $5,000 property damage. What this means is if you cause an accident, your insurance company will pay up to $15,000 for each person injured in an accident you caused; and up to $30,000, if more than one person was injured in an accident you caused.
You may think you are the most careful driver and that you would not cause an accident, but accidents are often just that–accidents. Have you ever had a pedestrian step off the curb into an intersection, just as you are making a right turn and you saw them at the last minute? Or, what about someone who walks behind your car, just when you are backing out of a parking space?
Most of the time, $15,000 is not an adequate amount to cover the medical expenses of even the most minor injuries. When there are additional multipliers, or other people in a car have been injured, $30,000 would have to be divided among all parties reducing the amount available to compensate any injured parties.
When your insurance limits are inadequate to compensate all injured victims, the next step is the injured party will look to you personally for compensation. Do you own a home with equity? Have a savings account or other valuable assets? You may want to consider increasing your insurance to at least 100/300, if you own a home. The difference in premium is usually not much higher, yet you are obtaining much more needed protection.
Consider the $5,000 minimum property damage coverage. Even minor vehicle repairs can run $3,000 or greater. What if more than one car is involved in an accident? What if the other party’s vehicle is totaled? Take a moment and just look at all the vehicles on the road. It’s just common sense none of them be replaced for $5,000? Again, increasing your property damage limits to $25,000 or $50,000 may not cost that much more, but additional coverage will no doubt provide greater peace of mind.
We will address other insurance coverages in our next newsletter. Stay tuned!