You make sacrifices to achieve your financial goals. You stick to coupons and take staycations because you know that a saved penny is an earned penny. A dollar does not go as far as it once did, so you may want to consider changing your car insurance coverage to save money.
You should read this entire blog post to see why you should not lower the limits of your car insurance liability.
What responsibility does
The car insurance’s liability protection begins when you are found to be legally responsible for a car accident, and it helps to pay for damages caused to the parties who were injured or affected by the accident.
Your liability protection includes two parts:
- Body injury
- Property damage
Body injury
Liability for bodily injury begins to work when you injure someone in an accident.
Injuries to help pay for:
- The injured party̵7;s healthcare costs
- The lost wages of the injured
- Legal costs if you are sued
There are two types of coverage limits for bodily injury:
- Per person limit: This is the highest amount the coverage will pay if a single person is injured in an accident.
- Per accident limit: This is the highest amount the coverage will pay if more than one person is injured in an accident.
Property damage
If you are legally responsible for an accident, property damage liability covers the cost of:
- Vehicle repairs
- Legal costs arising from property damage
- Lost income if damaged property is needed for business purposes
- Repairs of buildings, mailboxes, fences and more
Policy restrictions
You will often see liability limits for car insurance written like this: 25/50/20 or $ 25,000 / $ 50,000 / $ 20,000.
Here is a more detailed look at these liability limits:
- $ 25,000 personal injury liability per person
- $ 50,000 bodily injury per accident
- $ 20,000 property damage by accident
With these liability limits, the insurance would pay up to $ 25,000 if you cause an accident in which a single person is injured (with certain exceptions that apply, depending on the policy). The insurance would pay up to $ 50,000 in an accident you cause where more than one person is injured, and the coverage would cover up to $ 20,000 of property damage.
Lower liability limits = Higher financial risk
When thinking about your car insurance liability limits, think about how much you want to prepare for the worst case scenarios. You pay damages with your own money when you do not have enough coverage.
In another blog post, we discuss the main reasons for car insurance is increasing:
These are the same reasons why you should reconsider low liability limits. With the help of the insurance scenario 25/50/20, we show you why cheaper is not always better when it comes to car insurance.
- The average new car costs about $ 35,000. A $ 20,000 property damage limit will probably not cover costs if you cause an accident involving another driver’s new vehicle.
- In 2010, the National Highway Traffic Safety Administration (NHTSA) estimated that the average car death costs an average of $ 1.4 million over a lifetime, and that a critical injury from a car accident costs an average of $ 1 million over a lifetime. As we mentioned, the cost of medical services has increased by 12% since 2012, and low personal injury limits would not come close to covering these amounts.
Unfortunately, we see claims where new vehicles become total, drivers and passengers suffer serious injuries and lives are lost.
Are you distracted?
Do you see yourself as a careful driver who takes all precautions to avoid accidents? You can use this as a reason to have low limits for car insurance liability.
Have you ever driven while:
- Are you struggling to stay awake?
- Talk to someone?
- Are you recovering from a bad day at work?
- Eat or drink?
- Are you using your mobile phone?
If you answered “yes” to any of the above questions, you’ve been distracted. According to NHTSA, distracting driving led to:
- 3,450 deaths in 2016 (last year with available data)
- 391,000 injuries in 2015 (last year with available data)
Forces beyond your control
Sometimes nature contributes to accidents caused by:
- Aquaplaning
- Glides on ice
- Loses sight in fog
- Struggling to steer in strong winds
Let the umbrella protect you
An umbrella policy is designed to give you extra liability protection beyond your usual limits. When it comes to car insurance, an umbrella policy provides extra protection for bodily injuries and property damage.
Medical bills, vehicle repairs and legal fees increase rapidly, especially when you can be sued for mental pain and suffering if you cause an accident.
An umbrella policy is especially useful when you have a teenage driver on your policy. According to the Centers for Disease Control and Prevention (CDC), teens are more likely to have motor vehicle accidents than any other age group.
Better way to save
To save on your car insurance, see if you are eligible for Pekin Insurance discounts such as:
- Auto / Hem
- Anti-theft device
- Multi-Car
- Good student
- Paid in full
