How Much Insurance Do You Need?
That depends on how big of a wreck you are planning to get into.
Take a look at the situations below. They may help guide your choices.
Wreck # 1: Typical Fender Bender
This sort of damage indicates that the driver bumped another car he or she was behind. This driver needs Collision coverage to cover their car and liability coverage to repair or replace whatever they hit. Doesn't look like a lot of damage and I would guess it didn't do much damage to the other part. Maybe. I would guess the other party has similar damage at the rear of their car. Might be a $5,000 see ya later sort of deal. If you carry state minimums of 15/30/5 on your insurance policy, you may just be ok as long as the other party doesn't report a headache and need a chiropractor or therapy.
But maybe they don't. Maybe you nudged them just enough to send them spinning up the road and straight into a hill or other object that doesn't move out of the way. What if it looks more like the next image.
Wreck # 2: A couple fenders and a door bender.
This one is a doozy. Your $15,000 insurance policy will not cover this. You will end up in court. You can plan on bringing home only 50% of your earned income over the next year or 2 or 3, depending on how much you earn. You can expect to be in court for a good 6 months first though so you will have some time to trim your expenses so that you can thrive on half of your income.
Or, you can thank Heavens that you visited this webpage, that you bought enough insurance to be able to get through the aftermath of this accident, knowing that the insurance company has it covered, you will be defended and the injured parties will be assisted with their expenses.
If you want to be covered for this wreck, I will suggest a liability limit of at least 100/300K or 250/500k or the most you can afford.
This is the day that
no one talks about.
Wreck #3: The One No One Talks About.
This is the wreck you never want to think about. The one where the other party slides into another car, that other car slides over the bridge barrier, goes off of it. The one where the father or mother of a family is killed. The one where the car they were driving was an $80,000 Mercedes. The one where the family only had one income to thrive on and it was an income that supported owning that Mercedes.
The accident that you may be found at fault for on that rainy day, the one that a judge decides that you are on the hook for the family's loss of a $150k+ per year income, because your mistake took out their one and only income source.
If you plan to have THIS accident, you will need the umbrella policy to cover you for $1 million or more.
So, it is up to you. Which wreck do you plan to get into, and when?
You might be surprised to know that the difference in purchasing for the minimum amount of insurance and the maximum isnt much. Please ask us about budgeting for better insurance policies, we are happy to help you get the best value for your dollar.