Exactly What is Auto Liability Coverage and How Does That Stuff Work?
The Liability Lowdown
Once you step back and ponder awhile on what all is at risk by buying only the minimum liability insurance your state requires, you may be tempted to stop and ask yourself “What on earth was I thinking?” Can you imagine paying back a claim to an insurance company on a monthly basis until some unimaginably huge sum was repaid? You could be doing that until you're so old you can't see to write the check anymore! This, my friend, can happen to you as a result of not carrying enough liability coverage.
The Wreck That Roared
You can be held accountable for an
accident without ever touching
another vehicle. Imagine this
scenario: You’re innocently tooling
down
the road, oblivious to anything but
the babe or the hunky dude you’ve
been ogling as they strolled along
the sidewalk. Suddenly, wham! You’ve
caused another vehicle to swerve
into the curb and slam on its brakes
to
avoid hitting you because you ran
that BIG RED STOP SIGN, and that
car,
in turn, has been crashed into by
yet another vehicle. Now you’re
looking square in the face of not
only a property damage claim against
you by two drivers with totaled
cars, but possibly one or more
bodily
injury claims as well.
Or suppose you're talking on your
cell phone to that babe or hunky
dude
you met at the scene of your last
wreck, when Dippy the dog runs out
in
front of your car. You swerve to
miss him and run smack into Acme
Electric Company's utility pole. The
pole itself is going to cost you,
to be sure. They don’t give those
things away. But what about Acme
Electric’s lost revenue because it
can’t provide power to its
customers?
Now you’re looking at possibly
thousands of dollars. The utility
company
will no doubt have its own insurance
provider, but that insurer is going
to come looking for you-know-who to
reimburse them either by writing a
check on the spot, paying monthly
installments, garnishing your wages,
or – hopefully – making use of that
fully adequate liability coverage
you were smart enough to buy.
A Price on the Priceless?
Now let’s take a closer look at
bodily injury liability coverage and
see
how far the state-required minimum
limits will go. These limits vary
from state to state, but pretty much
standard minimum coverage is
$15,000 per person and $30,000 per
accident for bodily injury
liability.
This means that if you are at fault
for injuring, disabling, or even
killing another human being, all
your coverage will pay out is
$15,000.
If you do the same to two or more
people, your insurance provides only
$30,000 to be divided amongst two or
20 people, however many are
involved. What happens then? Those
people will no doubt have attorneys
who will immediately go after any
financial assets you have – your
house, your car, your boat, your
savings account – anything they can
to
compensate their client(s) for
medical bills, pain and suffering,
car
repairs, or in case of a death,
provision toward the care of
dependent
survivors. You really don’t want to
go there, now do you?
Do Unto Others . . .
You’ve got to look at it from an
accident victim’s perspective: If it
were you instead of them, wouldn’t
you want to have quality medical
treatment, your car repaired or
replaced, or if you die, wouldn’t
you
want to know your family is going to
be taken care of adequately?
So How Much is Enough?
This is a good place to give some deep thought on how much liability insurance – both bodily injury and property damage -- is really right for you. Professionals in the field strongly suggest liability limits of $100,000 per person, $300,000 per accident for bodily injury liability, and $100,000 property damage liability along with an excess or umbrella policy for $1 million.
Look Beyond Your Nose
There is a mistaken notion among
students and other young people that
because they have nothing, there is
nothing they can lose. What they
don’t think about is their future.
After they get out of college and/or
when they are bringing home a real
paycheck, that income can – and will
– be garnished, if necessary, if
they wind up the loser in a lawsuit.
Up your Auto
Coverage ASAP!
Of course, you can only afford what
you can afford. But make it a
priority to increase your coverage
as much as possible as soon as
possible. Then you can breathe a
little easier when you get behind
the
wheel and hit the road – just don’t
get hit yourself!