Auto insurance has been viewed by some as just a piece of paper you buy to be legal to drive. Look at the commercials about auto insurance. They talk about how much money you can save. All you do is go on your computer and in five minutes you have a policy. Saving money is great and getting a policy online in five minutes sounds nice too, but what if you are not sure what you are buying? If you have a loss and it is not covered, all that time and money saved isn’t so important anymore.
How much of the cost of this accident would you like your insurance policy to pay for?
Most people would say all of it, of course. A Texas state minimum policy could come up short if a person was in a major accident. Let’s take a moment to look at state minimum coverage. If you look at your policy you will see the policy limits. If you see $30,000 each person/ $60,000 each accident/ and $25,000 for property damage, you have the state minimum limits. Here is what they mean. The policy would pay a maximum of $30,000 for each person injured in an accident, and it won’t pay over the policy limit of $60,000. So if you are liable for an accident and there is $100,000 of medical bills, your insurance policy would pay for no more than $30,000 for each person and no more than $60,000 total. You would be responsible for at least $40,000. The last limit is $25,000 for property damage. That means the most the policy will pay if you damage someone’s property in an auto accident is $25,000. This would be fine if you just had a minor fender bender, but if you were in an accident that involved several cars, or totaled a vehicle valued at more than $25,000, you would be stuck with the rest of the bill. Be aware that property damage limit does not only include vehicles. It could be other property you damage with your car like houses and fences.
Do you really need Uninsured/Underinsured Motorist coverage since the state doesn’t require it?
A few years ago we had a client that came to our office concerned about her auto insurance limits. She decided to increase her uninsured/underinsured motorist coverage. Not long after that, she had a flat on the side of the highway. She walked behind her car to take a look. A man who was not paying attention swerved and crushed her between his car and hers. He only had the minimum amount of coverage, and that was not near enough to pay for her injuries. Our client was so glad she had made the decision to increase her uninsured/underinsured motorist coverage.
If someone hits you in an auto accident, their policy pays for the damage to your car and your injuries. What if they don’t have insurance or they just have the minimums? Did you know one in four drivers in Texas does not have current insurance? That is where Uninsured/Underinsured Motorist Coverage comes in. If you had this coverage your policy would pay for your injuries and damages.
Should I get Personal Injury Protection?
Protection or PIP is another coverage not required by the state. PIP covers you and others that get injured because of your car. Your child could get his hand slammed in the car door. PIP would cover his doctor bills. PIP would also cover lost wages. If you or a passenger got hurt and needed to miss work to go the doctor, PIP would cover the pay you missed. It would also cover you for tasks that you cannot do because you are hurt. For example: if you need to mow your lawn it would pay for someone to do it for you.
Collision & Other than Collision
Collision & Other than Collision covers the physical damage to your car. Collision covers your vehicle if it collides with another vehicle or object. This does not include hitting an animal. Other than Collision covers damages that do not result from collision such as fire, theft, windshield, hail and hitting an animal. If you are financing your vehicle most of the time your lien holder will require you to have Collision & Other than Collision. If you drive an older vehicle you may not want to buy Collision and Other than Collision because if your car is totaled the policy will pay what the value of the vehicle is at the time of loss. Another thing to consider is if you will have a teen driver in your household soon, you might want to consider getting them a vehicle that you do not have to finance so you don’t have to carry Collision or Other than Collision required by the lien holder. About half of a teen driver’s premium comes from the collision coverage. You could literally save hundreds of dollars a year by getting them an older vehicle.
It is ultimately your decision on how much insurance to buy. Just be aware that auto insurance is more than a slip of paper that allows you to be a legal driver. Most importantly educate yourself on what you are getting. Contact us and we would be glad to go over your policy with you to make sure you have adequate coverage at an affordable rate. Your auto policy could be what keeps you out of financial hardship if the unthinkable happens. Remember cheaper and quicker isn’t always better.