What Does it Mean to be Under-Insured?
There is a significant difference between having just enough auto insurance to be legal and in having the right amount of coverage to ensure your security. Legal minimums tend to cover liability alone – and even that only to a certain extent. Drivers can find themselves in real trouble if they are involved in an accident that costs more than their minimal coverage provides, or in the event of an incident outside the boundaries of that coverage.
While minimum coverage amounts vary from state to state, they tend to range between $15,000 and $20,000. While this amount certainly covers the vast majority of minor accidents, a serious incident – particularly one that involves injuries or death – can easily exceed these amounts. This leaves the driver personally responsible for all excess expenses, no matter how high this figure might be.
Additionally, problems like car theft or damages occurring from natural disasters may not be covered by a minimally compliant plan. Many victims of car theft are shocked to find that there is no recourse or reward for them if their car is stolen – it is simply gone, with the burden of replacing it falling squarely on their shoulders. The same is true for damage from hail, hurricane, tornado, or any other weather event; if they are not covered against these incidents, then the owner of the vehicle assumes all financial responsibilities for repair or replacement.
Homeowners face similar challenges when calculating how much insurance to purchase for their property. While no one is going to pick up and steal your home itself, theft of personal property and damage from natural events are still pressing issues.
What is the Right Amount of Coverage for Me?
While meeting only minimum standards all but guarantees that the individual will be under-insured, there is no set amount of coverage that will guarantee complete coverage. Instead, individuals need to assess their own financial situation and the types of risks that they regularly face.
Users in higher crime areas, or those known for particular types of weather events, may have a slightly greater need than others for those types of coverage. There is no such thing, however, as a place that is 100% safe from these threats either and as such it is recommended to most car owners that they have at least some coverage to offset the potential damage of these eventualities.
For determining what level of coverage you require, you first need to ask yourself what amount of money you would be able to cover in the event of a major accident. The higher that amount, the less coverage you need. The fewer resources that you have access to, the more an expensive accident could cripple your financial flexibility for years to come.
This can be difficult to calculate, however being honest with yourself and your financial capabilities will go a long way in helping you determine the amount of auto insurance that you need.
There is no set level of coverage that is right for everyone, however skating by with only the legal minimum is rarely the wisest choice. While it may prevent you from getting a ticket if you get pulled over it may not be enough in the event of anything more serious happening. No one likes to contemplate these possibilities, however, failing to do so may have more serious consequences down the line.
For more information about your auto insurance options, and to make sure you are not under-insured, contact the experts at Absolute Choice Insurance today! We pledge to provide affordable insurance to you, your friends, and your family.