I come across quite a few customers who think they have a really great rate. They know exactly how much they pay and they know it hasn't been steadily increasing too much, but mainly they know its pretty cheap. What some people don't realize is that their coverage is pretty cheap too. There are way too many people left in the dark about what the different coverages actually are. All they really know is that they are, "covered". But are they really? Is it just enough to have the absolute state minimums for where you reside? These are mostly put in place to make sure you're at least doing something and not driving around with no coverage at all. I would say 9/10 times the state minimums are not enough coverage, not even close.
For Utah the minimum coverage is 25/65. Now most people don't know what this actually means. 25 represents $25,000 of coverage per person in an accident and 65 represents $65,000 of coverage per accident. This may seem pretty substantial but I assure you it is not as high as you think. Say you are driving down the road in a huge beefed up truck and you unfortunately look down for a couple of seconds only to look up and see you are heading straight for that little sedan. There is no time to brake before you hit and boom, accident. Now lets assume you were going a fairly decent speed and caused some serious damage. The person(s) injured in the other car are rushed to the hospital and stay for a couple of days. Then they have lasting injuries that require rehab and because they have been in so much pain they have been taking time off work and losing wages. Not only have they been losing wages but also racking up debt from all of the bills piling up. We all know how expensive things can be and you can see your $25,000 can be gone before you even realize. Now imagine that the most tragic thing happened, in this accident someone died as a direct cause of the incident. Lets say this person was the primary source of income for their family and they want future earnings and lost wages as a result of what you caused by being in that accident. $25,000 dollars certainly isn't going to pay for the next 10 years of someones income even if they were making the average salary in the US. There are so many things that can happen as a result of an accident that will dwindle that $25,000 down to nothing and now they can come after your wages, your assets and your bank account. This is something that is unlikely in most peoples life but certainly something that could happen and you would want to be prepared.
The coverages increase as follows:
- 50/100: $50,000 per person/$100,000 per accident
- 100/300: $100,000 per person/$300,000 per accident
- 250/500: $250,000 per person/$500,000 per accident
- 500/500: $500,000 per person/$500,000 per accident
I usually try and recommend at least 100/300 as it is quite a bit more coverage than minimums and can save you in serious accidents where you are responsible. Remember that these coverages are for the Liability portion of your policy, meaning they cover any Bodily Injury you may cause as a result of an accident for which you were responsible. It is covering others bodily injury caused by you, it is not covering yourself. Coverage for your own bodily injuries should be covered by the other person if they are at fault, but if they are not properly covered you want good coverage for yourself that would step in. I will cover Uninsured and Underinsured coverage in my next post to show what exactly those break down into.
So maybe your premium is low, but maybe your coverage is low and putting you at serious risk in the event of an accident. Make sure you are covered properly and that you know how much coverage you have.
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