Auto Insurance Coverage - Why You May Need Higher Limits
Insurance coverage is required to operate a vehicle in every state. Each state has required coverage limits that you must meet. And while the legally required state minimum may be enough to get you on the road, it may not be enough coverage if you were to be involved in a serious accident. If you already have insurance, or are looking to get a new policy, you may need to raise your limits above the minimum.
In each state, you are required to carry at least basic liability coverage. Liability coverage pays for bodily injuries and property damage for the other person if you are found at fault in an accident. If your liability limit is $5000 for property damage, you will be legally responsible for any property damage beyond the $5000 your insurance company will pay.
What this means is that the money will have to come out of your pocket. If you do not pay, the other party in the accident can file a suit against you for the remainder of the money. If you are found liable in court, then you could risk losing your assets. Assets are things of value that you own, like your house or car. Furthermore, the court has the authority to have your wages garnished, or taken, to pay the debt. Having a judgement against you could adversely affect your credit, making it harder to find loans, jobs, and car insurance.
While the damages in most accidents don't exceed policy limits, it can and does happen. Here's an example of how quickly one can go over the policy limit quickly. Here in Pennsylvania, the required property damage limit is fifteen thousand dollars. If I were to get into an accident that involved more than two cars, the amount in damages could easily exceed the policy limits, especially if a car is totaled. Not to mention, medical procedures for serious bodily injuries can cost a fortune. While you may think it can't happen to you, keep in mind that accidents involving three or more cars and four or more people are not uncommon.
The best way to protect yourself from such problems is to raise your liability limits. For just a few dollars more a month, you could potentially save thousands. Getting more coverage is a fairly simple process. If you already have a policy, simply call your agent and inquire about raising your limits. If you haven't yet purchased an insurance policy, get an auto insurance quote and ask your agent what he or she recommends. Insurance agents can assess your individual situation, and make an accurate guess as to how much coverage you should get. If you have valuable assets, it's recommended to have enough coverage to match your net worth.
Paying for car insurance every year can be costly, but it can also be worth it. Do you know what's worse than paying for car insurance? The answer is paying for car insurance that doesn't give you the protection you need. After all, the purpose of car insurance is to protect your finances. Even if you only have to pay $1500 in damages because you went over your policy limit, it's still more than it would have cost to purchase the extra coverage.
I understand that raising your limits may not be an affordable option. But consider this question. If you can't afford to raise your limits, could you afford to pay for any damages that your insurance doesn't cover? By investing a little more now, you could save yourself a lot of trouble later. As the old saying goes, "it's better to have and not need, than to need and not have."
You purchase car insurance to protect your finances and assets. But without enough coverage, you could be jeopardizing both. Don't just go with the required state minimum, raise your limits to get the coverage you need.
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