How much car insurance do you need? What does it take to be confident in the coverage on your policy? At Reis Insurance, we answer these types of questions every day. Car insurance is meant to protect you, your family, and your assets. When it comes to your policy, having high enough limits and the right types of coverage is priority number one. In this article, we’ll explore some reasons why.
Your Vehicle is Damaged, Destroyed, or Stolen
It’s the type of scenario you hope you will never face, but statistics say you probably will – multiple times. When your vehicle is damaged in an accident or another unexpected event, would you rather scramble to find the cash for repairs, or rely on your insurance company to pick up the bill? Would you rather absorb the loss of your investment and use your savings to buy an entirely new vehicle, or cash a check from the insurance company reimbursing you for your loss? Chances are you would rather not use your personal assets to cover the cost of damages to a vehicle. With collision and comprehensive insurance, you don’t have to.
What are Collision and Comprehensive?
Together, collision and comprehensive make up the physical damages portion of your car insurance policy. They both cover repairs to your vehicle or reimbursement for a total loss, only for different types of events. Per the name, collision insurance pays for damages caused by a collision, whether it involves only your car or multiple vehicles. Comprehensive insurance covers damages or loss due to other non-collision events, such as theft, fire, or hitting a deer.
You do not choose limits for the collision and comprehensive section of your insurance policy – only a deductible. The deductible is the amount of money you agree to pay out of pocket toward the cost of your future claims. Depending on your insurer, the deductible options could range between $100 and $1,000, with higher deductibles usually translating to lower premiums. On the other hand, a lower deductible can reduce your financial burden after an accident.
If you need to file a claim, your insurance company will assess the cost of the damages and determine whether the cost of repairs will exceed the actual cash value, or ACV, of the car. Unless you drive an antique car or collector’s vehicle, the ACV is the maximum amount the insurance company will pay to reimburse you for damages or loss of your car. (Antique and collector’s cars are typically insured for an agreed value instead.)
Who Needs Physical Damages Insurance?
Most drivers need collision and comprehensive insurance regardless of whether they own, lease, or finance their cars. If you do not own your vehicle outright, you may be responsible for any damages to your car and protecting the financial interests of your lender or the dealer who leased your vehicle to you. Often, physical damages insurance requirements are outlined in the terms of a lease or loan agreement.
Even if you own your car outright, however, you can still benefit from collision and comprehensive insurance. Not only can it protect your financial investment, but it can also ensure you do not have to find alternative transportation if your car is totaled.
You Damage Someone Else’s Property
If you cause an accident, you could be sued for the damages. Here in Wisconsin, drivers are responsible for the property damages they cause when operating a vehicle. That is why state law requires that all drivers maintain a minimum amount of property damage liability insurance – currently $10,000. If you cause an accident, your property damage liability insurance will be the first to pay up to the limits of your policy.
Unfortunately, carrying only the minimum coverage could expose you to tens of thousands of dollars in risk – especially if you run into a home, business or a brand new luxury SUV. If your financial liability is $75,000 and you only have $10,000 in coverage, how will you cover the remaining $65,000? The victim’s insurance company might pay for the damages upfront and then sue you to recover the loss. That could put your income, assets, savings, and even your future inheritance at risk. Here at Reis Insurance, we can help you decide how much property damage liability protection you need.
Compensation for Harm You Cause Others
Post-accident damages are not always limited to your vehicle and other people’s property. If there are victims involved, you could also be held responsible for compensation of injuries. Here in Wisconsin, drivers must carry bodily injury liability insurance, but the minimum coverage limits are typically too low to protect against a major lawsuit. At Reis Insurance, our primary focus is ensuring our River Falls area customers have adequate limits that minimize financial risk vulnerability following a collision or other covered accident.
Bodily injury claims can total tens or even hundreds of thousands of dollars. Add to that the cost of any punitive damages you may have to pay due to negligence behind the wheel, and a single lawsuit could become much more than just a financial setback. Fortunately, bodily injury liability insurance covers damages caused by accident-related injuries, such as medical bills, lost wages, emotional distress compensation, and more. This coverage pays first up to the limits of your policy, minimizing any potential impact on your personal finances.
Without adequate coverage, you could be responsible for any damages that exceed the limits of your policy, ultimately putting your income, assets, and savings at risk. It will not matter to the victim or a jury if you were only partially responsible for the accident or if you caused a collision due to bad weather or a blown tire. The only thing that matters is that the accident happened and you are responsible for the injuries.
Split Limits vs. Combined Single Limit (CSL)
Insurers provide bodily injury insurance coverage in two different ways: combined single limits and split limits. Combined single limits, or CSL, are expressed as a single number on your insurance policy. This means that the bodily injury coverage available is limited per accident – not per individual. A 300 CSL would provide up to $300,000 in total available bodily injury liability protection regardless of the number of victims.
A split limit differs from a CSL in that it provides a maximum total liability limit as well as an individual limit. Split limits are listed as two separate numbers that indicate in thousands the maximum amount the insurer will pay toward a bodily injury claim. A 250/500 split, for example, provides for $250,000 maximum coverage per person with up to $500,000 total available coverage combined per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
If an uninsured driver hits you, getting compensated for your injuries could be a challenge. Likewise, you could have trouble recovering your medical bills and other losses if the at-fault driver has too little insurance to cover your expenses. One of the most important steps you can take to protect you and your passengers is adding uninsured motorist (UI) and underinsured motorist (UIM) protection to your policy. UI takes care of you and your passengers if you are a victim of a driver who is uninsured. UIM helps fill in the gaps left behind if the at-fault driver has too little coverage to meet your needs.
Money to Help with the Little Things
Accidents can leave you broke – even if you have plenty of physical damages and liability protection. It’s easy to overlook the ‘little things,’ such as towing charges, medical deductibles, co-pays, and the cost of renting a car while your vehicle is repaired. Instead of losing hundreds of dollars on small expenses, talk to one of our team members about personalizing your coverage to better fit your needs.
Beyond Car Insurance
Your car insurance can go a long way in protecting you against unexpected losses, but sometimes even the highest coverage limits can stop short of your liability after a serious collision. Traumatic injuries, fatalities, and accidents with multiple victims can all contribute to major judgments and court awards. To better protect your assets, we recommend purchasing an umbrella policy that will supplement your primary coverage. Umbrella insurance builds upon the limits of your car insurance liability, extending it by up to $1 million or more. This affordable coverage could protect you against financial ruin – especially after a major accident. For more information and to find out if umbrella insurance could be right for you, contact our office today.