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.
Compensation for Harm You Cause Others
If you cause a car accident, your liability could extend far beyond damages to property. In many cases, collisions involve injured victims who need medical attention due to the accident. If you are sued, you could be responsible for compensatory damages, as well as punitive damages if a jury determines you were negligent in causing the accident. Bodily injury liability insurance is designed to protect you against financial responsibility, protecting your income, savings, and other assets against expensive lawsuits.
Here in Wisconsin, bodily injury liability is mandatory coverage, although the minimum limits required by the state are not enough to minimize your risk vulnerability in an accident. Here at Smith Insurance and Financial Services, we recommend that our Big Bend customers opt for higher limits that will better cover things like medical bills, lost wages, emotional distress awards, and more.
Split Limits vs. Combined Single Limit (CSL)
You may see the bodily injury liability coverage on your insurance policy represented in one of two ways: as a combined single limit (CSL) or a split limit. The combined single limit will include a single number, which expresses in thousands the maximum amount of coverage your policy pays for all injury liability combined. A 300 CSL, for example, pays up to $300,000 in total bodily injury liability regardless of how many victims are injured.
Split limits are listed by two different numbers on your policy. If you have a split limit, the insurance company limits the maximum available coverage for the accident, as well as per injured individual. A 250/500 split limit indicates coverage of up to $250,000 per individual injured in an accident, with a maximum of $500,000 total bodily injury liability coverage available for all injured parties combined.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
There are many uninsured drivers on the road, and far more who drive with liability limits that are too low. If one of these drivers hit you, how do you ensure your medical needs are met? Here at Smith Insurance and Financial Services, we believe that uninsured motorist (UI) and underinsured motorist (UIM) protection are two of the most important types of coverage you can have on your policy. They protect you and your passengers against the negligence of others, helping to fill in gaps left behind by uninsured drivers and drivers with inadequate coverage.
Money to Help with the Little Things
If you have ever been in a car accident, you know it can take a week or more for car repairs. How much will it cost you to pay for a rental car during that time? If you need medical attention, could you afford the upfront cost of health insurance deductibles and co-pays? Add in the cost of towing your vehicle after the accident, and it is easy to see how quickly the ‘little things’ can add up to a major financial burden. Fortunately, additional coverage is available to provide financial relief with towing, rental car, and medical payments coverage.
Beyond Car Insurance
Having excellent car insurance coverage is the first step in protecting your income and assets against liability in a car accident, but it may not be enough in some cases. Occasionally, accidents happen that result in million-dollar lawsuits and result in total financial devastation for at-fault drivers. If you injure and permanently disable a young physician, for example, how will you afford millions of dollars in long-term medical expenses and lost future wages?
To better protect your income and assets, we recommend purchasing an umbrella policy that can supplement the primary coverage on your car insurance policy. Umbrella insurance typically extends your liability protection by $1 million or more and is available at very affordable prices. For more information or to find out if umbrella insurance could be right for you, contact our office today.