Auto Insurance

Auto insurance coverage limits are not something that should be taken lightly.

Many times, when reviewing coverage limits with customers they often tell me they want “full coverage”.  When I press further as to what they mean by full coverage they tell me they want state minimum, comprehensive and collision.  In some cases, this is full coverage.  In most cases, it is not.

Full coverage auto insurance means different things for different people.  When considering your liability limits, you need to consider what you are leaving at risk in the event of an at-fault accident.  Once you exhaust your limits, what assets are you leaving exposed?

Lets take a look using the state minimum liability requirements of 15/30/5.  The breakdown for these mean $15,000 per person/ $30,000 per accident/ and $5,000 property damage.

Now lets say you are involved in an at-fault accident, where people in the other car were severely injured and were hospitalized.  Individual 1 medical expenses totaled $20,000 and Individual 2 medical expenses totaled $25,000.  Here is how the insurance would pay out.  Individual 1 would pay out at $15,000 (per person limit), individual 2 would pay out at $15,000 leaving you exposed and responsible for the unpaid amount of $15,000 for which a judgement against you could be granted as the limit on the policy exhausted at $30K.

We never believe we could be involved in an accident, but it does happen.  What assets do you have at risk?

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