Skimping on Insurance Now May Cost Much More Later On

Skimping on Insurance Now May Cost Much More Later On

Most people rarely give much consideration to their automobile insurance coverage. Candidly, evaluating one's automobile coverage provides about the same excitement as preparing tax returns. Thus, important insurance issues are either ignored completely or given little attention.  Moreover, many consumers simply want to purchase the cheapest automobile insurance that they can find. Unfortunately, failing to fully appreciate the risks involved in having too little insurance or purchasing the cheapest or least expensive automobile insurance may be significantly more costly than expected. Obviously, the cost of insurance is always a legitimate consideration when purchasing automobile insurance. Commonly, the cost of automobile insurance reflects a number of factors, including the amount of the insurance limits that is being purchased. For example, in Virginia, the minimum automobile liability insurance required by statute is $25,000 per person and $50,000 per accident. Insurance is ordinarily sold with "per person" and "per accident" limits. A copy of a typical declarations page showing auto policy limits is attached to this article. While higher insurance limits are available and may be purchased by a consumer the additional coverage is likely to result in higher insurance premiums. That said, failing to purchase adequate bodily injury liability coverage is the most frequent mistake people make when purchasing automobile insurance. Liability coverage provides the money that your insurance company pays to others if you or your insured drivers are at fault and cause someone to be hurt in a motor vehicle collision. One of your risks in simply purchasing the minimum of $25,000 in automobile liability coverage is that if you or a member of your household severely injures another and is successfully sued, he/she will be personally responsible for paying any part of a judgment greater than $25,000.00. With the increasing cost of medical treatment, it is not unusual for a simple trip to the emergency room to cost $3,000 or $5,000.00 for minor injuries. If significant medical treatment is required, the cost of a trip to the emergency room could approach $50,000 and skyrocket if the injury is more serious or requires surgery. For example, in high-speed automobile collisions, bones are commonly shattered and painful surgery is required, possibly leaving victims with astronomical medical bills to pay. Therefore, by failing to purchase more than minimum liability insurance, you may be jeopardizing you and your family's financial future. In addition to purchasing adequate "liability coverage" to protect yourself from mistakes made when driving and injuring other people, you should also have adequate uninsured (UM) and underinsured coverage (UIM) coverage. Uninsured Motorist Coverage is insurance that protects the consumer if you, your passenger or family member is injured by the driver of a motor vehicle who does not have any insurance at all and is considered "uninsured." Underinsured Motorists Insurance provides coverage to the victim if the driver at fault has some insurance but that insurance is not adequate to cover the damages caused by the collision and is less than your coverage. Therefore, to adequately protect yourself from the serious financial consequences that can occur as a result of being struck by an uninsured or underinsured driver, you should consider the consequences that may flow from the decision not to purchase higher insurance limits. Other coverage that will come into play when purchasing insurance includes "Property Damage" liability coverage and "Comprehensive Coverage." Property damage liability coverage is that coverage from which your insurance company will pay on your behalf when you or your insured passenger or family member is at fault in a collision that causes property damage. Property damage liability limits are also important because you don't want to be personally responsible for the damage done to an expensive car. (It is not unusual for some cars on the road to cost more than $50,000}. Comprehensive Coverage is coverage that is paid by your insurance company for damage done to your insured vehicle by events like hurricanes and limbs falling from trees. Comprehensive coverage reimburses you for damage done to the insured vehicle by non-collision events. Medical Payments coverage should also be considered when purchasing insurance. Medical Payments coverage is coverage whereby your insurance company will reimburse you, your passengers, or your family members up to your policy's medical payment limits for medical bills that are incurred in an automobile collision. Purchasing Medical Payments coverage should be a serious consideration especially if you do not have high-quality health insurance. In summary, because it costs more to purchase higher limits, many people hesitate to do so. That is understandable. Nevertheless, it is short-sighted to simply purchase insurance based on the cost of premiums alone. The well-informed consumer should be aware that these other coverages are available. Consider the benefits associated with purchasing that coverage when buying auto insurance. Based on skyrocketing medical costs today, a severe accident could potentially wipe out a family's entire savings. Skimping on these coverages now may cost you much more in the future compared to the cost of purchasing adequate insurance coverage now. Disclaimer: This article is intended to be educational only and is not intended to constitute legal advice in your individual case.

William B. Kilduff


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