InsuranceThought — Blogs About Insurance

Determine Your Insurance Needs - Just In Case!

Most states, by law, will require you to carry Bodily Injury (BI) Liability and Property Damage (PD) coverage on your auto insurance policy. Though most people understand that they need BI & PD, they don’t have any idea how to determine how much coverage they should have.

Try this question: What if your vehicle was involved in an accident today and someone else was injured or killed? What do you believe the family of the victim would sue for? Suffice it to say, it’s likely it will be quite a bit more than you have on hand to write them a check for. Where will you get the money to pay them? You could rely on the equity in your home or perhaps your savings or investments or, in some states, even have up to 25% of your wages taken to pay the awarded sum. But are you prepared to sacrifice everything should this tragedy occur?

If not, consider the following:

1. You and Your Family:

Turn the accident around for a moment; should the unthinkable happen and you or a loved on is killed or injured in an auto accident, where will you get the money you need if the person responsible does not carry enough insurance? Medical bills can be covered by health insurance (if you have it), but it won’t pay for loss of life, permanent disability, or pain and suffering.

You may have life insurance, but is the benefit amount sufficient to cover your family if one of them is killed? And, life insurance will not pay for the misery, the pain, and the suffering you will likely experience that can result in weeks or even months off work with no income.

The coverage that will pay for this is known as un/under-insured motorist insurance. You can only have as much coverage as you do for liability; your agent should be able to help you determine the amount you would need.

2. Your Vehicle

Comprehensive and collision coverage are also often misunderstood. This is what is sometimes called “full coverage.” Basically, if you hit something (a tree, a sign, whatever), you are covered by collision. Comprehensive covers broken windshields, theft and vandalism, fire, etc. The higher the risk (deductible) you’re willing to take on, the lower your premium will be.

To determine proper auto insurance coverage, you will, of course, need to consider your household budget – not only how much you can afford monthly, but what you can afford should you be involved in an accident. An excellent way to determine the proper coverage for you is to meet with your local agent and go over each type of coverage in detail.