20 Oct


Just as important as finding out what available insurance policies and provisions are out there and available to you, is making sure you have adequate insurance YOURSELF! This cannot be stated clearly enough. Many times people end up having serious injuries and have very inadequate insurance or no insurance at all. This is unfortunate. This may, or may not be the situation with the reader of this guide. If an accident has already occurred, then it is a little late for THIS situation. However, this can and should be a prompt to insure your coverages are adequate in the future, and if necessary increase your insurance coverages. Whether it be homeowners, disability insurance, auto insurance, or whatever the case may be; there is really no such thing as “too much insurance.” However, the realities of modern life are more a matter of what one can afford. So we will explore what the best coverages are outright; and then the best coverages for the money, if one is on a budget.

A homeowners or renters policy is always wise. It is relatively inexpensive (for the coverages granted) and a good idea. It is broad, far reaching coverage. Disability insurance is likewise a good idea. It can help cover medical expenses and wage losses from either on the job or home injuries. Automobile insurance is something every driver must carry. The problem is, many people carry only the “state mandated minimum” coverage, which is usually VERY inadequate coverage. Yes it is cheaper, but you are getting what you pay for – very little.

A much better plan is to pick and choose what is the best coverage available for the money, the biggest “bang for the buck.” Auto accidents are by far the most common accident and therefore auto coverage comes into play more often than most other coverages. Structuring your auto coverage in the best way possible, so that you get the most coverage for your dollar makes the most sense. First off, most state mandated minimum liability insurance coverage is $15K/$30K/$10K coverage. This means that for any given accident, an insured is covered up to $15K per person, maximum; $30K total aggregate, this is the maximum total amount of injury coverage, regardless of the number of people involved in the accident; and $10K in property damage coverage. That is the full extent of state mandated minimum insurance coverage. This only provides coverage to OTHERS, to people you hit or damage. This provides you with NO coverage for yourself or your guest passengers.

Above these damage limits you are on your own. Not only are these extremely low coverage amounts, but damages ABOVE these amounts would come from the insured (you) personally. Therefore, this inordinately low coverage could put at risk your home, your bank accounts, 401k’s, property, etc. It is not wise to keep your coverage this low. Further, and perhaps even more importantly, the coverages that can and DO help you (UM/UIM) are affected by these numbers. Your UM/UIM coverage cannot exceed your liability coverage, so to have high limits there, we must have high liability limits.

Ideally, you want as much UM/UIM coverage as you can possibly get, period. THIS coverage is what covers you and your family and guest passengers. This coverage protects you if the person who hit you has NO insurance; or has very MINIMAL insurance. It further protects you even if you are a pedestrian, or are riding your bicycle or are riding in another person’s car as a passenger. UM/UIM coverage is some of the best coverage out there and you want as much of it as you can get. However, remember that your UM/UIM cannot exceed your liability coverage.

So, if you want $100K/$300K, (or even better still $250K/$500K or $500K/$1 million in UM/UIM coverage), you need to carry that amount of liability coverage. Luckily this insurance gets cheaper [per unit] the more you buy. So, adding $25K UM/UIM might cost a little more than basic coverage, but not that much more. Further, increasing to $100K is only a little more still, not 4 times what $25K cost. Likewise, $250K or $500K UM/UIM is only a little more still; maybe two or three times the $25K premium. It simply is not that much more money, especially considering the protection you receive. UM/UIM is truly outstanding coverage; and coverage you should NOT do without. The only coverage that MAY be better, especially dollar for dollar is umbrella coverage. It is best to have both.

If you have limited funds you may wish to forego other coverages to help fund the UM/UIM. One coverage that gets sold on auto policies quite often is medical payments coverage. If money is tight, it is recommended you forego this coverage. Although it does provide coverage for medical expenses, it is usually capped at $5K or sometimes $10K (rarely as high as $25K); but the AMOUNT you must spend for this coverage is out of proportion to its value to you, especially relative to other coverages. Further, the benefits usually go right to the medical provider, not YOU.

For instance, the premium one would pay for $5K in med pay coverage, might buy you $100K of UM/UIM coverage. There is no comparison. On the one hand you get $5K paid to your medical provider. On the other hand (probably for less money) you could get $100K UM/UIM coverage payable to YOU for your injuries. With a substantial UM/UIM amount like that, you could even find a medical provider who would treat you on a lien, with no out of pocket expenses, for any medical treatment you might need. Even if you needed to treat on a lien with a doctor for your accident injuries, you would still have a significant portion of the $100K left over for you at the end, for your pain and suffering. You can see the obvious advantages with the higher amount of coverage. Comparing $5K to $100K for the same money, it just makes more sense if you can only afford one coverage, UM/UIM is the way to go instead of just med pay.

Many people opt for towing and roadside assistance coverage on their auto insurance policies. Again, not a bad idea if you can afford it. If money is somewhat tight, your money is again much better spent getting UM/UIM coverage. Even if you paid for these coverages, the amounts covered by this insurance are very minor amounts. Does one really need to be insured against $100 – $200 charges? Further, if you ever make a claim under either roadside assistance or towing coverages, even for a minor amount of money, these STILL count as a “claims.” If you make two of them, most carriers will cancel your insurance, as this counts as 2 claims! (Even if they are only two, $100 claims) Again, these coverages compared with what UM/UIM provides there really is not comparison. You simply get much more (and better) coverage for the money.

Overall, it is simply difficult to beat the overall coverage and “good value” provided by UM/UIM coverage, and this should really maximized however possible. Obviously, if money is an issue, dropping unnecessary coverages like the above med pay, towing and roadside assistance will certainly help. In fact, even if one needed to raise deductibles (from $100 to $500 or even $1,000) this would help free up cash to pay for UM/UIM. Likewise, if even deeper cuts were necessary (comprehensive coverage, etc.) this still would make the most sense, as UM/UIM covers so many injury scenarios. This truly is the best coverage to have. Any way you slice it, UM/UIM is the one coverage that protects YOU, and pays you for your injuries, regardless of whether the person that hit you has adequate coverage or not.