Monday, December 16, 2013

How To Choose Auto Insurance Limits?!

I recently introduced a comparative rater (quote your own insurance) on our web site. Since the launch we have had prospective customers in Bellevue Ky as well as Ft. Thomas and Newport, use the site to get auto and home rate quotes from many of our affiliate companies. On the auto quotes, I have been relatively surprised at the range and variety of limits requested. Unfortunately I have discovered that most guests have a rather vague understanding of which limits are most appropriate for their life, or more specifically, financial circumstances.
I can certainly understand why folks are confused; what with the never ending myriad of ads on TV, the radio, in the mail - I saw an auto insurance ad in the john the other night! How can one make sense of all the noise? “Do I choose state minimum limits & save on premium?” “Is it worth buying some extra liability coverage or is that just throwing money in the – john?”
To begin, let’s start with the basics. Car Insurance liability limits are expressed as follows: ##/##/## or "Bodily Injury per Person "/" Bodily Injury per Accident" / "Property Damage (i.e. the other driver's car)". You’ll typically see companies or agents offering policies with limits “$25/50/25”, “$100/300/100”, etc. For readability purposes, the limits are represented in thousands. Therefore, in the latter of these examples, each individual you injure is owed up to $100,000 for medical expenses and the like; up to $300,000 per accident. Any property damaged is repairable up to $100,000.
Now to the important question; how much insurance is appropriate for me? Well let’s consider Ohio’s state minimum auto limits: $12,500/$25,000/$7,500. Are you comfortable with $12,500 per injured person? The following tidbit might help clarify the situation. According to the Agency for Healthcare Research and Quality (AHRQ), “the average price for an uninsured hospital stay in 2006 was $19,400.” As such, $12,500 isn’t exactly a windfall for an auto accident victim.
For a few extra bucks a month, I would posit $100/$300/$100 makes much better financial and moral sense. Also important to note, if someone is injured and the driver carries inadequate or no liability insurance, the injured party has every right to sue for recompense. If this were to occur, a judge would dictate adequate conciliatory arrangements which could include the withholding of future earnings or the seizure of assets. So, are minimum limits really worth it? If funds are super tight, maybe one or two fewer lattes a months would be a wiser sacrifice.
As an agent, I strongly encourage my insureds to secure, at a minimum, limits of $100/300/100. Again, for a few extra bucks a month, it's certainly worth it. In fact - and here's a kicker - some of our companies occasionally offer higher limits for less premium (depending on demographics and driving history). Yes, you could pay less for a $250/500/250 policy than you will for a $100/300/100 policy!
Well I hope I have clarified some of the confusion surrounding auto insurance & auto insurance limits. Also, getting a quote online or "kickin' the tires" is certainly an understandable exercise! I would give it a shot myself. But I would certainly recommend talking with a licensed agent before pulling the trigger on a policy. Better safe than sorry!
Happy Driving!