How Much Liability Insurance Should I Carry?
How Much Liability Insurance Should I Carry?
Liability is often the least understood, yet most important part of your auto insurance policy. Liability is what protects your income and assets from being taken, when you hurt someone in an accident.
Most policies provide coverage in split limits. This means there is a maximum amount that would be paid per person, and a maximum amount that would be paid, per accident. An example of a split limit is 100/300 (maximum of $100,000 per person hurt, with a maximum limit of $300,000 for any one accident).
To Determine How Much Insurance You Should Carry, Ask Yourself This Simple Question…
“If I was to seriously injure or kill someone in an accident, is that something I want my insurance policy to protect me against?” If your answer is, yes, then you should carry a policy with a minimum split limit of $250,000 or more, per person hurt.
According to Current Award Trends in Personal Injury, 53rd Edition, the national average cost of a vehicle liability award (serious injury and death claims) is $298,731. Using our liability limit example above, if a person carrying limits of 100/300 were to seriously injure or kill someone in an accident, and was presented with the average judgment of $298,731, their insurance policy would pay $100,000 (limit per person), and they personally owe remaining balance of $198,731.
What Can They Take From Me If My Insurance Falls Short?
If your insurance falls short in a claim, here is an sample of the assets you have at risk:
- Equity you have in your home and other real estate.
- Automobiles you own, with a value in excess of $2,300
- Liquid assets, such as savings account, checking account, mutual funds stocks, bonds, etc.
- Personal property like a motorcycle, boat, recreational vehicles, jewelry and other collectables.
- Your wages can also be garnished at 25%. Imagine having to adjust to a 25% cut in pay.
In addition to the initial judgment, until the balance is paid, you can owe an annual compounding interest of 10% on the remaining balance.
What’s it cost to protect myself against serious injury or death claims.
The simple answer is, not much. While costs vary from company to company, in most cases, if you already carry 100/300, it’s less than $10 per month.
We hope this information has been helpful, and we appreciate the opportunity to earn your business. If we can be of service or answer any questions, please don’t hesitate to contact us.
Ferreira Insurance Agency
916-201-2581
Choosing The Right Deductible
The most effective way to reduce your car insurance premium is to raise your Collision deductible. Most don’t like to consider a higher deductible because of the cost they incur, if they have a claim. However, lower deductibles mean higher premium. Here’s a simple way to look at it. With a higher deductible, I pay more, if I have a claim. With a lower deductible, I pay more, whether I have a claim, or not.
Obviously, your deductible shouldn’t be more than the amount of money you can get your hands on, if you have a claim. If it is, you could be put in a spot where you can’t get your car fixed. At the same time, a higher deductible, in most cases, will save you quite a bit of money, in the long run. Here’s how.
Depending on your car, if you have a $500 Collision deductible, and move your deductible to $1,000, you would save between $100 and $150 per year, per car. Considering the average driver has a claim that triggers their collision deductible, every 18 years, if you’re the average driver, you could save $1,800 to $2,700 in premium, per car, for every time you’d have to come up with the additional $500 in your higher deducible.
Low deductibles are money makers for insurance companies, and you should avoid them, when you can.
We hope this information has been helpful, and we appreciate the opportunity to earn your business. If we can be of service or answer any questions,
please don’t hesitate to contact us.
Ferreira Insurance Agency
916-201-2581
Options Every Car Insurance Buyer Should Consider
Glass Endorsement
Ever get a crack in your windshield? Most have. A broken windshield is covered by the Comprehensive coverage on your policy, subject to your deductible. A Glass Endorsement provides a separate, lower deductible when you have a windshield claim, usually $100 or less.
Uninsured Motorist Collision Deductible Waiver
Whenever you turn a Collision claim into your company, you’re responsible for your deductible, even if the accident is not your fault. There’s almost nothing more frustrating than having someone hit your car, then needing to come up with your deductible, because the person who hit you, didn’t carry insurance.
With Uninsured Motorist Collision Deductible Waiver, if someone with no insurance hits your car, you won’t have to pay your deductible.
Rental Car Reimbursement
If your car’s damaged, and need to rent a car, rental car reimbursement pays your rental fees.
This becomes particularly helpful when:
- You’re at fault or share fault in an accident (if you’re not at fault, the other person’s insurance will pay for your rental car costs).
- The other person’s at fault, and has no insurance.
We hope this information has been helpful, and we appreciate the opportunity to earn your business. If we can be of service or answer any questions,
please don’t hesitate to contact us.
Ferreira Insurance Agency
916-201-2581