This post is part two of the blog post that answers the question “How much car insurance is enough?”
Compensation for Harm You Cause Others
Even the safest drivers can cause accidents. You don’t have to be intoxicated or texting while driving; an unexpected tire blowout, bad weather, or even other drivers who slam on their brakes can all lead to collisions. Whether you are fully or only partially at-fault, if you injure someone in an accident, you can be held financially responsible for the cost of any medical bills, rehabilitative costs, lost wages, and even emotional distress awards you may be liable for after an accident. If you are found negligent, you may also be responsible for punitive damages – especially if you were driving while distracted or under the influence of a substance.
Bodily injury liability insurance is designed to shield you from the financial responsibility of another person’s injuries. Drivers in Waukesha and throughout Wisconsin must purchase at least the minimum bodily injury liability coverage required by law, but we here at Wolfgram Insurance typically recommend much more coverage than that. When it comes to liability protection, being underinsured could put your personal income and assets at risk.
What Would a Lawsuit Cost You?
Accident-related lawsuits can result in massive settlements and judgments. If you only had $25,000 in bodily injury liability coverage, how would you pay for a victim’s injuries that total more than $100,000 in medical bills and other expenses? That leaves $75,000 more than your insurance limits that you might have to pay out of pocket. Would you liquidate your savings? Would you make payments from future income? Simply raising the limits on your coverage could help you avoid such a scenario, potentially savings you tens or even hundreds of thousands of dollars.
Split vs. Combined Single Limit Coverage
Car insurance companies offer bodily injury liability coverage in one of two ways: split limits and combined single limit coverage (CSL). Split limits mean that there are two different limits – the first representing the maximum amount the insurer will pay to cover an individual victim’s injuries and the second representing the maximum amount the insurer will pay to cover all victims in an accident combined. On your policy, a split limit could appear as 250/500, meaning $250,000 individual bodily injury and $500,000 total bodily injury per accident. A combined single limit does not restrict the amount of money available per victim. Instead, a limit that appears on your policy as 300 CSL would provide up to $300,000 in total coverage per accident, which can be allocated to victims in any amount.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Not all drivers on the road are as responsible as you are. You depend on the insurance of other drivers to cover you and your passengers’ injuries after an accident. If you are hit by an uninsured or underinsured driver, however, you might have trouble recovering your losses. We consider uninsured motorist (UI) and underinsured motorist (UIM) insurance two of the most important types of protection you can purchase to protect you and your passengers against the negligence of others.
Money to Help with the Smaller Things
There are major costs associated with an accident, and there are small ones. Sometimes, it is the little things that can add up to big financial burdens if you do not have adequate coverage. We can help you personalize your car insurance policy with coverage for towing charges and compensation for a rental car while your vehicle is being repaired or replaced. Your policy can also include medical payments coverage for out-of-pocket expenses like deductibles and co-pays, regardless of who is at-fault for an accident.
Beyond Car Insurance
In most cases, a well-constructed car insurance policy that is personalized to meet your needs will financially protect you, your vehicle, and your passengers after an accident. However, there are some extreme cases in which even the highest coverage limits can come up short. For example, if you are sued for a major accident that resulted in a fatality or a career-ruining paralysis, your liability could easily reach $1 million or more. With a $500,000 limit on your coverage, you could still be facing financial devastation and years of wage garnishment. In these cases, it could be beneficial to have an umbrella policy that extends your liability protection with an additional $1 million or more in supplemental coverage. Our team can help you review your liability coverage needs to determine if an umbrella could be right for you.