Don't Make This Mistake with Auto Insurance

People Want to Save Money on Auto Insurance

In today’s world, the auto insurance industry is driven by competing for the lowest rates.  We are bombarded with commercials declaring that hundreds of dollars in savings are waiting for the taking.  We can get quotes and buy policies online without having to actually talk with an insurance agent to properly explain the risks of the policy we buy.  It’s becoming the norm for people to think “cheaper is better” and “I can do this myself.”


There’s Something Called Limits

While I love getting a good deal, it is important to understand one crucial detail before getting an auto policy: limits.  Often, lower rates are given because the limits are so low.  And low limits might help your wallet now, but they certainly won’t if you were to get into an accident.  

There are two major components to consider when reviewing limits: bodily injury liability and property damage liability.  These are protections put in place in case you are found at-fault in an accident. The state minimums vary, but in Pennsylvania, bodily injury is $15,000 per individual, $30,000 per accident (if more than 1 person is involved), and property damage is $5,000 (policies show this as 15/30/5).  So if you were to get the minimum limits in order to save some money, insurance would only cover $15,000/$30,000/$5,000. Anything higher than these costs would come out of your pocket.


Accidents Are Getting More Costly

Cars are surprisingly fragile.  We have all heard a story--or maybe personally experienced-- a small car accident that resulted in a totaled car.  I know someone who had an accident where both vehicles were only going 20 miles per hour. At even such a low speed, both cars were totaled.  With the average price of a car being $35,285, a $5,000 limit isn’t very much protection (you would owe $30,285 out of pocket in such an accident).  

Additionally, the cost of medical bills has increased tremendously, and continues to climb.  You might be surprised to learn that the average cost for a non-disabling injury is $53,200 and a disabling injury is a whopping $208,500.  Someone I know was involved in a minor crash and sprained their foot. Between the initial hospital visit, physical therapy, and lost time, they were able to recover $50,000!  If the person causing the accident had an individual bodily injury minimum of $15,000 (15/30/5), they would have payed $35,000 out of pocket. In a world where even a minor accident can cost so much, this is surely an area where you might consider increasing your limits.


Is Your Cheap Policy Protecting You?

All it takes is one careless moment on the road to rack up a lifetime’s worth of debt.

Don’t make the mistake of lowering your limits simply because it’s cheaper. The money you might be saving in the short term is peanuts compared to what you’d be stuck paying in the event of an accident.

Please, talk to your insurance agent to discuss your limits and where you might be at risk.