Why you should choose more than the legal minimum for Auto Insurance
When shopping for auto insurance, it is important to know the minimum required coverage of your state. This is often known as the ‘bare-bones’ insurance package, and many people automatically choose it when looking for cheap auto insurance. Put simply, many people think they can’t afford coverage beyond the legal minimum. Unfortunately, in the long run, you can sometimes end up paying more by choosing the cheapest plan. In today’s article, we’re going to explain why.
Most importantly, any collision has the chance to bankrupt you. Specifically, if you cause another driver bodily harm, you are responsible for his or her medical bills. Depending on your bodily injury insurance coverage, you could be responsible for a large chunk of that bill. In California and Arizona, for example, the legal minimum insurance policy for bodily injury is $15,000/$30,000. This means that the insurance agency will cover $15,000 of the other driver’s medical bills in the event of a collision, with a maximum of two collisions per year.
Obviously, if the other driver suffered significant injuries, his medical bill could be quite a bit larger than $15,000. Something as simple as a rear-end collision can cause significant back and neck injuries, forcing you to foot the bill for thousands of dollars of physiotherapy treatments. Before you know it, one simple accident ends up costing you far more money than you would have paid for additional coverage.
Another major reason to avoid bare-bones insurance coverage is to reduce the threat of lawsuits. In America, lawsuits are becoming increasingly more common. When you’re protected by a ‘bare-bones’ auto insurance policy, you also receive the most minimal legal protection. For example, if an injured driver sues you for $800,000 in damages when your insurance plan covers only $200,000, you are personally accountable for making up that difference.
Driving schools often scare young drivers with the legal implications of bare-bones auto insurance. For example, let’s say you hit another vehicle on the driver’s side door. During the collision, the other driver got two of his fingers stuck in the wreckage, and they had to be amputated. If that driver has a job in which he uses his fingers every day, he can file a lawsuit for lost wages and other damages. For example, if the driver was a middle-aged dentist with years of specialized education, you can quickly end up owing hundreds of thousands of dollars to that individual.
Bare-bones insurance plans can also be subject to rising rates. While the initial cost of the plan may be significantly lower than its competitors, this could gradually increase over time. Before you know it, your bare-bones auto insurance is costing you more than a better policy from a difference insurance agency.
Adding fifty dollars onto your monthly auto insurance bill may seem like a lot. However, in the long run, it’s often worth it to choose a more extensive plan. With bare-bones auto insurance coverage, you’re accepting a large amount of risk. When that risk catches up to you, you can be on the hook for an incredible amount of money. Before signing up for an insurance plan, always ask yourself: is bare-bones auto insurance really worth it?