How much car insurance is enough to minimize your risk vulnerability? If you are like many Wisconsin drivers, you are not sure. On the one hand, you want to save money, but on the other, you know that having the right coverage and adequate limits are much more important. In this article, we will explore the many reasons why the quality and amount of coverage you have is so important.
If Your Vehicle is Damaged, Destroyed, or Stolen
At Smith Insurance and Financial Services, we know you never anticipate an accident. We also know you would not want to pay thousands of dollars out of your pocket to cover your losses. Whether you lease your car, own it, or financed it through a lender, adding collision and comprehensive to your policy could be a small step that results in big savings.
Collision insurance is coverage that pays for repair or replacement of your vehicle if it is damaged in a car accident. This might include running into a business, a tree, a garage door, or even another vehicle.
Comprehensive insurance is coverage that pays for repair or replacement of your vehicle if it is damaged in a non-collision event, such as a fire or during a storm. It can also protect you against losses if you hit a deer or if your car is vandalized or stolen.
Both collision and comprehensive coverage types require drivers to select and contribute a deductible toward the cost of their damage claims. You select your deductible at the time you purchase your policy, and it may range from as little as $100 to as much as $1,000. Higher deductibles usually translate to lower the premiums, but they can be more financially burdensome when you need to file a claim. We recommend choosing a deductible that you could easily afford in the event of an accident.
You will not need to choose limits for your collision or comprehensive coverage. Unless you drive an antique car or collector vehicle, your insurance policy will likely protect you up to the actual cash value, or ACV, of your vehicle. In the case of antique and collector cars, the insurer will provide coverage based upon an agreed value designated within your insurance policy. The ACV is important when you file a claim. Insurers will pay for damages up to the vehicle’s ACV. If the cost of repairs exceeds this amount, the insurer will reimburse you for your loss based on the amount of your car’s ACV minus the deductible.
Who Needs Physical Damages Insurance?
Some drivers are required to maintain physical damages coverage according to the terms of a lease agreement or loan. Others who own their vehicles in full may have the discretion of opting in or out of collision and comprehensive coverage. However, statistics show that the average driver will file multiple claims for collision-related damages in his or her lifetime. Those numbers do not reflect the additional damages that will occur as a result of non-collision events, such as fallen trees, vandalism, or weather-related events. If you have collision and comprehensive coverage, you can protect your investment in your vehicle and minimize your out-of-pocket expenses when the unexpected occurs.
If You Damage Someone Else’s Property
Rarely do drivers cause an accident without causing damage to something in the process. Whether it is a home, business, or another car, you are financially responsible for the damages you cause when driving. Wisconsin laws require all drivers to maintain a minimum amount of property damage liability – currently $10,000. But what happens if the brand new luxury SUV you hit and ‘total’ is worth $60,000? That leaves a $50,000 gap between your available coverage and your actual liability that you will be personally responsible for.
In the case of property damage, a victim’s insurance company may pay for the initial damages and then pursue compensation by suing the at-fault driver. If your insurance limits fall short, it could put your savings, assets, and future income at risk. Here at Smith Insurance and Financial Services, our number one goal is protecting your financial future. We recommend personalized risk evaluations that can help you determine how much property damage liability coverage you may need to protect your assets.
Continue reading part two of “How much car insurance is enough?”