We hear it all the time: How much car insurance do I need to carry protect my income and assets against a possible loss? It is a good question that unfortunately requires a complex answer. Not only are there multiple coverage types to choose from, but there are also varying limits and deductibles that can make the decision more complicated. Ultimately, car insurance is meant to protect the policyholder, and here at Imes Insurance Associates, protecting our clients is and always will be our first and most important priority. In this article, we will explore reasons for carrying the right types of auto coverage and ample limits.
Your Car is Stolen, Damaged, or Totaled
Door dings, paint scratches and dents? We’ve all been there. If your vehicle ever makes it out of the garage, chances are it will get banged up from time to time. While minor damages are easy to absorb, a more serious incident, such as a collision, could cost thousands to repair. If your vehicle is damaged beyond repair, you stand to lose everything you have invested in it. That is, unless you have collision and comprehensive insurance that covers physical damages to your car.
Collision insurance is optional coverage that pays to repair your vehicle if it is damaged in an auto accident. If the cost to repair your car exceeds its valuation, the insurance company will compensate you for your loss minus your deductible.
Comprehensive insurance also pays for repairs when your vehicle is damaged, but the damages must have been caused by an event other than a collision. Whether you hit a deer on a rural road, or your car is vandalized or stolen, comprehensive insurance helps assure it will look and run good as new by paying for needed repairs or compensating you for your loss. Like collision, all claims are subject to your deductible.
Own, Finance or Lease, You Need Coverage
State law does not require that you carry physical damage coverage for your auto, however doing so generally makes good financial sense. If you own your vehicle outright, you have a financial investment to protect in the vehicle’s value. If you finance or lease your vehicle, you’re most likely under contractual obligation to maintain physical damage coverage on the auto that the lender is financing. This protects the lender’s financial interest in the vehicle until the lease is over or until the loan is paid in full.
At Imes Insurance Associates, we make it easy to add collision and comprehensive coverage to your policy. Simply contact one of our team members, and we will walk you through the process. There are no limits to choose for comprehensive or collision coverage, your vehicle is covered for its actual cash value. Typically, only antique and collector vehicles are insured for an agreed or appraised value.
We will show you deductible options and how they impact the premium associated with the comprehensive or collision coverage. The deductible is the amount of money you agree to pay out of pocket toward the cost of any future claims you may file against your policy. Deductibles can range from as little as $100 to as much as $1,000 or higher, and you can select different deductibles for each type of coverage and each vehicle on your policy. While higher deductibles may help to lower your premiums, it’s important to choose a deductible amount you feel comfortable paying out of pocket in the event of an accident or other covered event.
You Damage Someone Else’s Car or Other Property
Accidents do not always affect only you; others may be involved, too. If you cause an accident, you can be held financially responsible for any damages to victims’ property. Whether it is another car, someone’s home, or the front of a business, property damage liability insurance helps cover the cost. Here in Arizona, all drivers are required to carry a minimum of $10,000 in property damage liability coverage. While carrying the minimum amount complies with the law, drivers often find out too late that the minimum coverage is not enough to protect their income and assets after an accident.
For instance, if a driver carries only $10,000 in property damage liability, but destroys a $50,000 BMW in an auto accident, his policy would pay $10,000 toward the $50,000 total loss of the BMW. The remaining $40,000 would then most likely be paid by the victim’s insurance company, who then has the legal right to sue the driver responsible for the causing the accident to recover their financial loss. Even if the driver responsible for the accident does not have $40,000 in cash or assets, judgments and settlements may be recovered through years of payments from personal income.
Contact an independent agent here at Imes Insurance Associates to find out how much property damage liability protection may be right for you.
Compensation for Harm You Cause to Others
Drivers in Arizona are responsible for the injuries they cause in an accident. As an at-fault driver, your liability could total hundreds of thousands of dollars for a victim’s medical bills, vocational disability, and emotional distress. A jury may also impose punitive damages if you were guilty of negligence in causing the accident, such as texting while driving. Bodily injury insurance helps cover liability for injury-related expenses up to the limits of your policy.
Bodily injury liability is standard coverage for Arizona auto insurance policies and required by law. Policy-holders select their limits so long as they meet or exceed state minimum coverage requirements. If actual liability exceeds those limits, drivers remain financially liable for any remaining damages. We here at Imes Insurance Associates strongly recommend choosing a high-limit coverage that will protect your income and assets against a possible lawsuit.
Split Limits vs. Combined Single Limit (CSL)
Insurers cover bodily injury as a combined single limit (CSL) or a split limit. A combined single limit caps the maximum available coverage per accident – not per individual. A policy with 300 CSL pays up to $300,000 in total bodily injury liability per collision with no restriction on the maximum amount available per individual.
A split limit caps the available coverage per accident and individual. An example of how it may appear on your policy is 100/300, with the first number indicating up to $100,000 in available bodily injury liability coverage per individual. The second number represents a maximum of $300,000 total bodily injury coverage available for all victims combined per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
A 2014 study found that approximately 1 in 8 drivers is uninsured. If one of them injures you and/or your passengers – uninsured motorist (UM) and underinsured motorist (UIM) coverage can help. UM/UIM coverage does not cover damage done to your vehicle. It provides benefits for bodily injury related expenses caused by a motorist who has no coverage or fled the scene in a hit and run scenario, or they don’t have enough coverage to reimburse you for all your expenses related to your injuries. Unfortunately, underinsured (UIM) claims are not uncommon in Arizona considering state minimum coverage requirements are 15/30/10. It’s also worth noting that these benefits can extend to pedestrian activities and if you’re a passenger in someone else’s vehicle.
Money to Help with the Little Things
Small expenses are burdensome after an accident as well. In addition to the major expenses related to an accident, there are a lot of ‘little things’ like towing charges and rental car fees that can add-up as well. The good news is that most every auto insurance policy we recommend includes coverage for big and small expenses. From towing and rental car fee reimbursement to medical payments that cover you and your passengers regardless of fault, contact our office to find out how we can enhance your coverage benefits.
Beyond Auto Insurance – Umbrellas
Additional liability protection beyond the coverage offered in an auto insurance policy is often recommended. While the bodily injury and property damage liability covers most incidents, some accidents result in financial liability that threatens your income, assets, and way-of-life.
Contrary to popular opinion, high liability claims are not limited to high-speed violent accidents. Low-speed accidents involving individuals who may have compromised health can easily generate high liability claims. An umbrella policy offers extended liability protection that is secondary to your primary coverage.
Additionally, an umbrella can also extend UM/UIM benefit protection over your primary coverage. This is of particular value in Arizona, where the statute allows healthcare professionals to file “medical liens” for the full cost of their services. If your injuries were caused by another person, Arizona statute allows healthcare professionals in Arizona to “balance bill” you for services rendered, even if part of their bill was paid by your health insurance. This legal reality could have serious negative financial consequences should those liens exceed your auto liability limits and you find yourself having to pay them personally.
Your insurance policies are financial resources that can protect you when you are liable for injuries to others, as well as when you are injured by someone else. When you consider medical bills, disability, loss of future wages, and emotional distress as potential elements to a claim, we recommend an umbrella policy with the UM/UIM endorsed to provide continuation of payment for damages that exceed the limits of your primary coverage.
Most umbrella policies provide a minimum of $1 million in liability coverage, though higher limits may be recommended. Contact our office today to find out more about this important coverage and how it could protect your financial future.