This post is part two of the blog post that answers the question “How much car insurance is enough?”
Money for Harm You Cause Others
If you injure another driver or pedestrian, how much could you be sued for? The answer depends on some factors, such as the circumstances that led up to the accident, the extent of the victim’s injuries, the cost of future medical bills, the value of lost wages, and whether you were partially or total at-fault. Bodily injury liability insurance, which is mandatory coverage her in Wisconsin, helps protect you against lawsuits that could otherwise lead to financial devastation.
Bodily Injury Liability Coverage Options
Your insurer may offer bodily injury liability protection as either a split limit or combined single limit (CSL). Split limits, which are expressed on your policy as two different numbers, indicate the amount of bodily injury damages in thousands the insurer will cover per person and for the accident as a whole. So a 100/300 split limit would pay $100,000 for each injured person with a maximum of $300,000 in total coverage available for all injured parties in the accident. A combined single is expressed a single number and pays up to one flat amount in total bodily injury damages per accident with no per-person limits.
How Much Coverage Do You Need?
Here in Wisconsin, drivers are required to carry a 25/50 split at a minimum, although we almost never recommend such low limits. If you face a major lawsuit with low-limit or minimum coverage, your entire financial future could be at risk. Medical bills can easily total hundreds of thousands of dollars, and compensation for emotional distress can add to that cost. If a court also imposes punitive damages, such as for intoxicated driving or texting behind the wheel, your financial liability could soar. Having high bodily injury liability limits can protect your savings, assets, and future income against seizure, liquidation, and garnishment.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Some drivers fail to carry adequate liability coverage, which could affect you after an accident. If you are injured by an uninsured driver or a driver with too little insurance coverage, your uninsured motorist (UI) or underinsured motorist (UIM) protection can help fill in the gaps. UI covers your damages if the at-fault driver has no insurance at all, and UIM bridges the difference between the limits on an at-fault driver’s insurance and the value of your loss. UI and UIM are perhaps the most important coverage on your policy since it covers you and your passengers if you are injured in an accident.
Money to Help with the Smaller Things
Aside from your liability and personal losses after an accident, there are several other immediate expenses you could face. Perhaps you have a high health insurance deductible that requires major immediate out-of-pocket costs, regardless of who was at fault for your injuries. Maybe you need to rent a car to use while your car is repaired or until you can find a replacement. Here at Doug Hansen Insurance, we can help you custom-tailor your car insurance policy to include coverage for the ‘small things,’ such as rental car, towing, and medical payments coverage.
Beyond Car Insurance
If you have high liability coverage limits, you are off to a good start, but even the highest limits still might not be enough to protect you against an extreme scenario. The immediate and future medical bills alone could soak up the entirety of your high-limit coverage leaving you financially responsible for any other compensatory damages. If you happen to injure a young professional, such as a physician or a lawyer, a court could award millions of dollars to the victim. In situations like these, umbrella insurance can pick up where your primary liability leaves off, extending your coverage by $1 million or more. Given the value of an umbrella policy and its affordability, we recommend that most drivers seriously consider this important coverage.