How much car insurance is right for me? How do I know if I have the right kind of policy? The truth is the right car insurance policy for you is the one that provides you with all of the right types of coverage and ample limits for each. It is easy to lose sight of why we have car insurance until we need to use it. Ultimately, all of the coverage types on your policy – including those that reimburse other people – are meant to protect you, the policyholder. Continue reading to learn some reasons why having the right coverage and the right limits are essential.
Money to Fix Your Lost, Stolen, or Damaged Car
When you purchase car insurance in Sheboygan, you will be given to option of purchasing coverage for physical damages to your vehicle. The coverage may not be legally mandatory, but you should never forego this important protection unless you are prepared to spend thousands of dollars on repairing or replacing your vehicle after an accident. Furthermore, you may be under obligation to purchase and maintain coverage for your car if you lease or finance your vehicle from a dealer or lender.
For personal car insurance policies, physical damages protection is divided into two separate types of coverage – collision and comprehensive. Collision insurance reimburses you for vehicle damages caused in a car accident. This could be an accident involving multiple vehicles or only your own. Comprehensive insurance reimburses you for vehicle damages caused by incidents other than collision. This could be damage caused by high winds, hail, fire, theft, vandalism, or even hit a deer.
How Much Coverage Do You Need?
When it comes to collision and comprehensive coverage, there are no limits to choose from. You either have it, or you don’t. Most insurers will cover your vehicle for what it is worth, also known as its actual cash value. The only exception is for collector cars and antique vehicles, which may instead be insured for an agreed value listed in your insurance policy.
Though you do not have to select coverage limits for collision and comprehensive insurance, you do have to choose a deductible. This is the amount of cash you agree to pay out of your pocket toward the cost of any future claims you may file. Deductibles only apply to claims for your own personal losses – not liability claims. You may be able to choose an amount as little as $100 or as much as $1,000, with higher deductibles translating to lower insurance premiums. However, we only recommend choosing a deductible you can afford in case of an accident.
Money to Pay for Damage to another Person’s Property
Things don’t always go as planned behind the wheel of a car. If you are responsible for an accident, you can be held financially liable for any damages you cause to property that is not your own. This could be damages to other vehicles, a home, a business, or even government property. Property damage liability insurance covers the cost of repairing or replacing damaged property up to the limits of your policy. If your limits are too low, you could put yourself at risk of an expensive lawsuit.
Being Underinsured Could Cost You
The cost to repair or replace damaged property can be excessive. For example, if you were to drive your vehicle off the road, through a fence, and into the living room of a home, the damages could easily total $50,000. If you were to cross the median on a highway and hit a 2017 Jeep Grand Cherokee, you would be at-fault for the accident. If the vehicle is totaled, you could also be on the hook for as much as $40,000 in property damage losses. In these examples, you would rely on your property damage liability coverage to take care of the bill.
All drivers are required by state law to carry at least some degree of coverage, but far too often it is not enough. If you only had the state minimum of $10,000 in coverage, you could be sued for tens of thousands of dollars for damages that exceed the limits in your policy, not to mention the cost of your legal fees. You might be forced to dip into your savings, liquidate your assets, or make payments from future income to satisfy any judgment or settlement against you.
Compensation for Harm You Cause Others
How much can a victim’s injuries cost you after an accident? The answer is complicated since liability damages can include much more than just medical bills. There are also ongoing rehabilitative costs, lost wages, emotional distress compensation, and sometimes even punitive damages to pay. Bodily injury liability insurance can cover the costs, but only up to the limits of your policy. Wisconsin imposes a minimum coverage limit, but it is too low to provide adequate coverage for a major claim.
Here at Heinen Insurance, we recommend that our customers purchase high-limit liability insurance to protect against potential lawsuits. As a driver, you remain responsible for any damages that exceed the limits on your liability insurance – even if it means dipping into your savings or making payments from future income to satisfy the claim.
Split Limits vs. Combined Single Limit (CSL)
There are two types of limits for bodily injury liability – combined single limit and split limit. A combined single limit (CSL) is the maximum amount of liability coverage available per accident. If your insurance policy shows a 300 CSL, for example, you are covered for up to $300,000 of injury liability per accident. A split limit puts caps on the amount of coverage available per individual, as well as per accident. A 250/500 split, for example, provides up to $250,000 of individual bodily injury liability coverage and up to $500,000 of total coverage for all victims combined per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
More than 11 percent of Wisconsin drivers were uninsured in 2012. If you or your passengers are injured in a car accident, there is a more than 1 in 10 chance it will be the fault of an uninsured driver. Recovering accident-related damages from an uninsured driver could be a challenging and painstaking process. Uninsured motorist coverage (UI) helps ensure you and your passengers are covered for injuries caused by a hit-and-run or uninsured driver. We also recommend underinsured motorist coverage (UIM), which helps fill in gaps left by at-fault drivers with too little coverage.
Money to Help with the Little Things
Deductibles are not the only expenses you might face after a collision. There may also be towing charges, rental car fees, doctor’s office co-pays, and health insurance deductibles to pay. All of these expenses can add up quickly if you are forced to pay them out-of-pocket. Why worry about the ‘small’ things when your car insurance can cover the costs? Talk to an agent here at Heinen Insurance about adding coverage for the ‘little things.’
Beyond Car Insurance
You already know how important it is to maintain high limits for your liability coverage. In most cases, these are enough to pay for any damages you are responsible for after an accident. Some collisions, however, result in much higher financial responsibility. If you face a million-dollar lawsuit with only $500,000 of bodily injury liability coverage, how will you pay for the remaining damages?
Umbrella insurance protects your savings accounts, income, and assets against liquidation and seizure after a major lawsuit. It provides secondary coverage to your car insurance liability once you have exhausted the limits of your primary insurance. Most umbrella policies extend your liability protection by at least $1 million, although higher limits are available up to $6 million. Talk to one of our helpful team members for more information about umbrella insurance and whether it could be right for you.