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How Much Auto Insurance Should I Purchase?


July 18, 2019

In the event of a car accident— whether you are a victim or the person who caused the accident — you want to make sure that you have sufficient auto insurance to cover the damages.  States have minimum mandatory insurance coverages, but unfortunately, it is often the case that these minimums do not cover all of the property damage or injury expenses a person may incur in a car accident.

For example, Georgia law states that all drivers have to maintain minimum liability auto insurance for bodily injury regardless of how many people are hurt (with the above stated maximum insurance of $25,000 per person).  If you obtain auto insurance coverage of at least these amounts, you are in compliance with the law.  In some states, such as Florida, there is no requirement to purchase liability coverage.  Regardless, assuming you purchase state-minimum insurance coverage, would it be enough to protect your personal assets and future income if you are at fault?  Is it enough to compensate you if you are the victim in an accident with an uninsured or underinsured driver? Unfortunately, the answer to both questions is all too often a resounding "NO!"

Many car accidents will result in vehicle damage and medical expenses that readily surpass these limits. Car accidents can lead to serious injuries that require significant, expensive medical treatment and prolonged hospitalization, as well lost wages and pain and suffering. These bills add up fast and can easily exceed the minimum coverage limits required in your state. So how much insurance should you really acquire to protect yourself?  Let’s first examine some of the different types of automobile coverage available to you in order to help you determine what type of coverage is right for you.

Important Types of Insurance Coverage

Bodily Injury Liability Coverage- If someone is badly injured as a result of your negligent driving, that person can choose to file a lawsuit against you or bring a claim through your available insurance coverage.    Insurance coverage should be there to protect your personal assets. You also want to make sure you have enough insurance coverage so that hopefully the claim can be settled without the other party filing a lawsuit against you.  It is important to think about how valuable someone’s claim could be if you inadvertently cause an injury.  Injuries could be as minimal as a few scrapes and bruises.  On the other hand, injuries could involve millions of dollars of medical bills and lost income.

If you do not purchase enough insurance to cover your money and your assets from being exposed to a judgment in a court of law, you may run the risk of being personally liable for an amount in excess of your policy limits.  Should this happen, you could be faced with pay a judgment in excess of your insurance limits or filing for bankruptcy.  This is why we suggest that you seek out insurance limits that are high enough to cover your personal assets from a claim that could be asserted against you if you are accused of negligently injuring one or more people.  Another way to look at it is that if you accidentally hurt someone you would want to make sure you had enough insurance to take care of him/her. In the end, for most people, it is a balancing act of cost between what they can reasonably afford and the amount of insurance available for their budget. 

For some people the amount of insurance they feel they need may be $100,000. While for others who have substantial annual incomes and/or assets, the amount might be millions of dollars of coverage.  We encourage you to always explore the cost of higher limits when you get prices on auto insurance and to compare rates.  Many times, the additional coverage is not as much as you would expect.  We urge you to speak with an independent insurance agent (not necessarily an agent working for a particular insurance company) in your state who can answer your questions thoroughly about what coverage limits may be required where you live and to discuss other helpful optional coverages that may be available to you.  

Property Damage Liability Coverage– We also suggest that you obtain high insurance property damage limits to protect yourself.  Let’s say you were the at-fault driver for an accident and, using our example above, were subject to and purchased the minimum Georgia compliant coverage of property damage limits of $25,000.00. This means that no person can recover more than $25,000.00 from the property damage portion of your insurance coverage in one accident and your insurance will not pay more than $25,000.00 for all property damage that you cause. These numbers reset when another collision occurs.  Depending on the circumstances of the accident, for example, if multiple vehicles are involved with lots of property damage, $25,000 can quickly be exhausted. Many cars today are worth $50,000, $75,000 or even $100,000 or more. If this happens and there is someone or multiple people who were unable to recover any money from your insurance, they may want to bring a lawsuit against you personally to try to recover money from you or your personal assets.

Uninsured/Underinsured Motorist (UM/UIM) Coverage– In all states, it is possible to also purchase UM/UIM Coverage.  This type of insurance pays in the event that you are injured by a driver who either does not have insurance, or does not have enough insurance.  It is estimated that between 20% or even 26% of all drivers on the road in some states do not have any insurance.  In some states, a small amount of this coverage may be required, but typically it is optional coverage that you should discuss with your insurance agent.

Uninsured or Underinsured motorist coverage is not required in Georgia but it is very important to consider. Though all drivers are supposed to have minimum auto insurance, an unfortunate number of drivers in the state are not insured, which leaves you at risk of not being able to recover for your injuries or property damage if you do not have this specific coverage.  Additionally, most insurance carriers will generally not allow you to purchase more UM/UIM coverage than the amount of liability coverage, which is another reason to increase the entirety of your auto coverage.  If you were injured in a catastrophic collision that was not your fault and the person who hit you did not have insurance or did not have enough insurance to cover your claim for injuries, pain and suffering and lost wages, you would probably want the highest coverage possible that was available to you.  This is what you should think about when you are purchasing automobile insurance coverage. 

Optional Coverage to Consider Adding

There are other optional coverage selections in addition to the coverages discussed above, that are no less important, vary by state, and can benefit you and your loved ones in a time of need. Listed below are just a few of these coverages and how they may benefit you.    

·Medical Payment (MedPay) and/or Personal Injury Protection (PIP) coverage or other no-fault coverage: Such coverage may provide you and your passengers (dependent on your selected policy and coverage available to you in your state) in your vehicle reimbursement for medical bills incurred as a result of injuries sustained in a collision, regardless of who is at-fault for causing the collision.

·Rental car coverage: Adding rental coverage to your own policy for a relatively low cost can save you the hassle of waiting on someone else’s insurance company to provide you a rental car after a collision that is not your fault. Moreover, such coverage can generally provide you a rental even if the collision was your fault or damaged from a non-collision event, such as a tree falling on your car or vandalism.  

·Collision coverage: Collision coverage generally covers the loss or damage of your vehicle from a collision with another vehicle or object.  

·Comprehensive coverage: This may cover your vehicle damages when your vehicle is damaged or totaled due to an event that is not a collision with another car, but instead usually involves damage by fire, wind, hail, flood, theft or vandalism.

·Umbrella coverage:  Think of this coverage as an extra security blanket that is there to protect you.  Umbrella coverage extends above the insurance limits you have already purchased for your home, automobile or even sometimes boats or other watercrafts.  Generally, in order to purchase this coverage, you will first need to purchase the most liability coverage available to you from your insurance company.  Some insurance companies do not offer umbrella policies but an experienced agent can tell you which companies do.  Some umbrella policies, if you purchase the requisite types of insurance, will even extend coverage to you in the event that you have exhausted your underlying uninsured or underinsured motorist limits in a claim that was not your fault, and then need additional insurance to cover your injury claim.  Rates for these policies are relatively low in comparison to the amount of additional coverage you can purchase.

These optional coverage selections often vary not just by state but also by the policy you select through the insurance company you choose.  This is why it is important to speak to experienced insurance brokers and agents in your state and carefully compare different rates and coverages from multiple insurance companies, examine the minimum insurance limits required in your state, learn about optional coverages available to you, and carefully explore higher limits that fit your needs.

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Category: Auto Accidents

Please Note:
Many of our blog articles discuss the law. All information provided about the law is very general in nature and should not be relied upon as legal advice. Every situation is different, and should be analyzed by a lawyer who can provide individualized advice based on the facts involved in your unique situation, and a consideration of all of the nuances of the statutes and case law that apply at the time.