This post is part two of the blog post that answers the question “How much car insurance is enough?”
Compensation for Harm You Cause Others
Car accidents can leave behind a slew of damage – especially if injured victims are involved. That is why all drivers need bodily injury liability insurance to protect against expensive lawsuits. This coverage is designed to compensate victims for the cost of their injuries, including medical bills, lost wages, emotional distress, and more. Considering the compensatory and punitive damages from these types of claims often total tens or even hundreds of thousands of dollars, we here at Philleo Agency Insurance recommend carrying much higher bodily injury liability limits than the state requires. Without adequate limits, you could become personally responsible for paying any damages that exceed the limits on your bodily injury liability coverage.
Anyone can cause an accident at any time – even if you consider yourself a safe driver. It’s not always texting behind the wheel or driving under the influence that causes accidents, either. You could skid on a patch of ice, blow a tire on the highway, or perhaps just be in the wrong place at the wrong time. It does not matter how it happens; only that it did, and it is partially or totally your fault. There may be little you can do to avoid it, but you can take steps to protect yourself from financial devastation.
Split Limits vs. Combined Single Limit (CSL)
When you select your bodily injury liability coverage, your insurer will either offer you a combined single limit (CSL) or split limits. A CSL appears on your insurance policy as a single number, such as 300 CSL. In this case, the insurer would cover up to $300,000 of total bodily injury damages for an accident, regardless of how many victims are involved.
Split limits are slightly different in that there are two different limits the insurer imposes on policy-holders. An example of a split limit would appear as 250/500, with the first number indicating the insurer will only pay a maximum of $250,000 in bodily injury damages per injured individual. The second number means that a maximum of $500,000 in damages is available for all victims combined in a single accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Perhaps the most important part of your insurance policy is the coverage that protects you and your passengers if you are injured by an uninsured or underinsured driver. Uninsured motorist (UI) and underinsured motorist (UIM) compensate you and your passengers for medical bills and other expenses when the at-fault driver is either uninsured or has too little coverage to pay for your losses.
Money to Help with the Little Things
Sometimes the smallest or least obvious expenses total up to a major financial burden – particularly after an accident. For example, your health insurance might cover the bulk of your medical bills, but only after you pay co-pays and a hefty deductible. If your car is damaged, you might have to find alternative transportation to work and pay towing charges from your accident. By adding extra coverage to your policy, you can receive medical payments coverage, as well as compensation for extra expenses, such as rental cars and towing.
Beyond Car Insurance
At Philleo Agency Insurance, we work hard to prevent gaps and holes in your coverage. Even the most comprehensive insurance policies, however, may come up short of covering your entire liability after an accident – particularly for major collisions that result in multiple injuries, permanent disabilities, or even fatalities. In the event of a $1 million lawsuit, for example, a maximum bodily injury liability limit of $500,000 would only pay a fraction of the damages. Without an umbrella policy, the at-fault driver may have to pay the remaining liability from savings or by liquidating personal assets. If that still is not enough to cover the claim, the driver might have to make payments from future income to satisfy the debt.
Umbrella insurance is an affordable way to supplement the liability coverage on your primary insurance policies. This important coverage picks up where your car insurance leaves off, extending your liability protection by as much as $1 million or more. Purchasing an umbrella policy now could protect you and your family against financial devastation, saving you hundreds of thousands or even millions of dollars. To find out more about umbrella insurance and whether it could be right for you, contact our office today.