If you lost your job due to COVID-19 or are having some other sort of financial trouble, you may be looking at reducing your insurance coverage as a way of saving money. While reducing your coverage will usually lower your premium, it’s important to understand the financial consequences if you need that coverage. Keep reading to learn more.
What Does Uninsured and Underinsured Motorist Coverage Cover?
When you buy bodily injury and property damage coverage with your car insurance, that coverage applies to other drivers, not you. If you get in an accident caused by another driver and they don’t have those coverages, your bodily injury and property damage coverages won’t help with your own expenses. Instead, you need uninsured and underinsured motorist coverage to replace those coverages.
But Don’t All Drivers Have to Have Insurance?
Yes, all drivers technically have to have car insurance to be on the road. Unfortunately, the reality is that they don’t. In Wisconsin, about 14% of drivers on the road don’t have insurance. That’s about a one in seven chance that a driver you get in an accident with won’t have insurance. When you think about how quickly it takes for you to encounter seven cars on the road, you can see how many uninsured drivers you come across. If you drive out of state, the odds could go up even more since Wisconsin is about in line with the national average for uninsured drivers, and many states have far more people driving without insurance.
But Can’t You Sue the Other Driver?
Again, you can technically sue the other driver for anything not covered by insurance, but it’s not as simple as that. First, lawsuits take at best months and more often years to resolve. Your doctors and car repair shop aren’t going to wait that long to get paid. You may also have regular bills that you need to pay if you have to take time off from work and lose wages.
Second, lawyers aren’t free. Most personal injury attorneys are “don’t pay unless you win,” but they take about a third of what you recover. If you receive a settlement for $600,000 in damages, you get $400,000, and the attorney gets $200,000, leaving you still short $200,000 that you can’t recover.
Finally, you can’t collect on a lawsuit if the other person has no money. Many people who don’t have insurance aren’t in a good financial situation. If you win $600,000 but they have no savings or assets and a minimum wage job, you may never see a cent.
What to Do if You Need to Reduce Your Insurance Costs
If you need to reduce your insurance costs, take the following steps in this order.
- See if your insurance company is offering any automatic refunds or discounts due to COVID-19.
- Let our agents shop for quotes from multiple insurance companies for identical coverage.
- See if you can get on an alternative payment plan.
- Ask your insurance agent if you have more coverage than you need in any area.
- If you have money in savings, look into increasing your deductible.
- If you’re still thinking about reducing or canceling your coverage, consider if you can leave your car in your garage for a few months and use alternative transportation so you don’t take the risk of driving without enough insurance.
To get help figuring out what to do or comparing quotes, talk to Heinen Insurance today.