Car Insurance

Deciding How Much Insurance To Buy

Buying car insurance is a tricky proposition. Deciding how much is enough and what would be too much is even trickier. When it comes to protecting yourself, the best bet is to err on the side of caution and be a little more liberal with the limits of an automobile policy where they really count.

The portion of auto insurance that really comes into play when there is an accident involving other people and/or property is the liability coverage and/or bodily injury protection. In many states, this coverage is the law. This is smart, very smart. But, the problem is the required limits are often very low. This leaves the door open in the event of a major crash that the other party will come after the driver directly for any damages over and above the policy limits.

So, what does that mean?

Well, in a state where the minimum liability requirement is, let's say $40,000, that's all the insurance will cover in a crash. If another person's injuries are severe or property damage is extensive, the actual costs can be much greater. All one has to do to confirm this is check the price of an average one-night stay in a hospital. This means the person involved in the crash or the owner of the property might come after you for the difference. This can and does happen.

Protecting yourself and your assets in a crash can be as simple as having a higher limit on bodily injury coverage and liability insurance. Instead of taking that $40,000 limit, go for $100,000 per person and $300,000 per accident instead. The cost difference generally isn't huge and the savings down the road can be great.

While it's not always the case, a higher limit policy can give a lawyer leverage on your behalf after an accident. Oftentimes, the other party will be willing to settle for the limit of the policy, this can keep you out of court. But, if the policy you have is low on coverage, they might not being willing to settle. Instead, they can opt to sue you directly, something you don't want to have happen.

Having too much insurance is a waste of money, but not having enough can be tragic. The smart thing to do to protect yourself and your assets in the event of a crash is to make sure a reasonable amount of coverage is provided. A few extra dollars a month for a higher limit policy can mean all the difference in the world if a crash does happen.

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