Minimum Coverage Means Minimum Protection
Yes, minimum coverage is the cheapest way to go in the short term. But is it really the cheapest if you have an accident?
Here’s your reality check.
In the event you cause an accident, your auto insurance liability limits cover injuries to the other driver, the other driver’s passengers, and your passengers. Here in Maryland, you are required by law to purchase a minimum amount of car insurance. However, purchasing only state minimum limits may not be enough, depending on the situation. Having adequate liability coverage can be the difference between being well protected and potential financial disaster that may affect you for years to come.
What is the Maryland minimum?
By law, in the state of Maryland every driver must have minimum insurance coverage of 30/60/15. What does that mean? Minimum liability limits of 30/60/15 means the insurer will provide bodily injury liability coverage up to $30,000 per person injured in any one accident, and $60,000 for all persons injured in any one accident, and up to $15,000 for property damage in any one accident.
Sounds reasonable, but what if you have an accident and the damages exceed the policy limits?
Good question. Your insurance company will only pay up to the amount of your policy limits. So, if you’ve chosen Maryland’s minimum property damage limits of $15,000 and are responsible for an accident which results in $25,000 in property damage or more, the insurance company will only pay $15,000, and you will be responsible for the remaining $10,000. Ouch! Where is that going to come from?
So, is purchasing the minimum limit ever enough?
That depends on your personal appetite for putting your assets at risk. Think about the costs for car repairs, hospitalization and follow-up medical care which could continue for years, especially in cases where someone suffers a serious injury. And then there’s lost earnings for those whom you injure, too. That can add up quickly. So, if you’re purchasing only the minimum limits, that is often inadequate to cover the costs of all damages resulting from an accident.
Okay, so more than the minimum might be necessary, but how much do you really need?
The Insurance Information Institute, recommends you have at least $100,000 bodily injury protection per person, and $300,000 per accident, more commonly known as 100/300 coverage. However, depending on your individual circumstances, even this amount might not be enough. Another option is to purchase a personal umbrella policy (PUP) for additional protection. This coverage would kick in when you auto policy limits have been exhausted.
Back to your appetite for risk.
Here’s the bottom line – if you’re legally responsible for damages which exceed your coverage limits, you’ll be responsible for paying the difference, period. So, the time to discover you don’t have adequate insurance coverage is BEFORE you’re involved in an accident, not AFTER.
If you’re interested in your safeguarding family’s current well-being and financial future, and securing a little more peace of mind, the folks at Freedom Insurance are here to help answer your questions and show you all your available options. Give us a call today!