Tuesday Tip: The Minimum Insurance Policy IS NOT Enough and Here's Why


Time and time again I have had personal injury clients who carried only the minimum amount of automobile insurance coverage required by law. When they receive their medical bills, they are surprised their insurance covers only a portion of their bills. Minimum insurance coverage of $25,000 sounds like plenty, but injuries costing in excess of $50,000 resulting from motor vehicle crashes are common.  I have handled many cases in which the medical bills alone were around $300,000.
Photo Source: Wikimedia

Each state has a required minimum, and it can be found online at:  www.360financialliteracy.com. In Idaho, you must carry liability coverage for bodily injury losses and property damage (car repair) losses you cause in an automobile crash.  The bodily injury and property damage liability is 25/50/15. This coverage means that your insurance will pay a minimum of $25,000 for each person injured in the accident, up to $50,000 for the whole accident (no matter how many people are involved), and up to $15,000 for any damage to the other person's vehicle.

Moderate to severe auto accidents could easily reach over $100,000 in damages and medical bills. If you get into an accident in Idaho and you only have the minimum insurance, your insurance might not cover all of the losses resulting from the accident. The amount of insurance you have can also help pay your own losses if an uninsured or underinsured motorist injures you.

I highly recommend everyone buy uninsured/underinsured motorist insurance.  I have many, many clients who are hit by uninsured or underinsured motorists.  If you carry underinsured motorist coverage, your company will pay for your damages to the extent the other motorist is underinsured, up to the limit of insurance you have purchased to protect other drivers from your negligence.

I recommend you carry $100,000 of liability insurance that is available to pay if you injure another, and also carry the same amount of uninsured/underinsured coverage to pay for your losses if an underinsured motorist injures you.  Consult your auto insurance agent regarding increasing your coverage.  In some cases, you may be able to double your coverage for less than an additional $10 per month.

Sources for more information:
http://www.autoinsurance.org/why-buy-auto-insurance-that-is-more-than-minimum-coverage/

 http://www.bankrate.com/finance/insurance/is-minimum-car-insurance-coverage-enough-1.aspx

http://www.nationalgeneral.com/learning-center/insurance-basics/how_much_coverage.asp

http://www.nytimes.com/2012/08/25/your-money/auto-insurance/how-to-know-if-you-have-enough-auto-insurance.html?_r=0

 https://www.progressive.com/understanding-insurance/entries/2009/9/1/are_minimum_limits_/

 http://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/State-by-State-Minimum-Coverage-Requirements

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