Car insurance can be a tricky thing. Here at Gutman Insurance, we get a lot of questions, such as “How much car insurance is right for me?” or “What types of coverage should I have on my policy?” While no one wants to overpay for too much coverage, being underinsured could prove to be far more expensive. When it comes to your insurance policy, remember that it is there to protect you against a major financial loss. In this article, we will explore reasons you need the right types of coverage, as well as adequate limits.
Money for Your Lost, Stolen or Damaged Car
Most Wisconsin drivers depend on their vehicles for transportation year-round. Whether you need it for your daily commute or use it for errands and leisure, what would you do if it were stolen, damaged, or destroyed due to an accident or some other event? Without personal vehicle coverage on your car insurance, you might have to pay for damages out of your pocket and may even have to find another vehicle or alternative transportation. With collision and comprehensive protection, you can relax knowing you will be back on the road in no time.
What are Collision and Comprehensive?
Collision and comprehensive coverage work together to make up the physical damages portion of your insurance policy. They both pay for repair or replacement of your vehicle, only for different circumstances leading up to your loss. Per the name, collision insurance covers damages to your vehicle stemming from a collision. Comprehensive insurance covers the ‘rest,’ as in events other than collision. This might be theft of your vehicle, vandalism, or even damage caused by a weather-related event.
When you file a claim for damages to your vehicle, you may be required to pay a deductible toward the cost of your damages. This is the amount you select when you purchase your policy, often ranging somewhere between $100 and $1,000. Your deductible is a matter of personal preference and budget. A lower deductible means that you will pay less out of pocket in the event of an accident, while a higher deductible could translate to lower car insurance premiums.
When you file a claim for collision or comprehensive damages, your insurance company will assess the damage to your vehicle to determine whether it should be repaired or replaced. If your car is damaged beyond repair, the insurance company is likely to compensate you for the loss based on its actual cash value. If it’s an antique vehicle or a collector’s car that is damaged, your policy may instead cover your vehicle for an agreed value.
Do You Need Collision and Comprehensive Coverage?
Though not required by state law, it is worth noting that most lenders will require borrowers to maintain coverage for physical damages when leasing or financing a vehicle. At Gutman Insurance, we recommend collision and comprehensive insurance to any policyholder who wishes to protect the value of his or her vehicle, as well as those who do not wish to pay for another vehicle or alternative transportation out-of-pocket in the event of a total loss.
Money for the Property Damage Liability
When you operate your vehicle, you take on the risk that you could damage someone else’s property. If you cause an accident or lose control of your vehicle, you could be held financially responsible for any ensuing losses. The State of Wisconsin requires that all drivers carry a minimum amount of property damage liability – currently $10,000.
For a minor accident, such as a small fender bender, $10,000 might be enough to take care of the damages. However, things could get quickly out-of-hand if you cause a multiple-vehicle collision, hit a high-value luxury vehicle, or damage someone’s home or business. In these cases, the owners of the damaged vehicles or property can pursue you personally for compensation of damages that exceed the limits on your liability insurance. Even if a victim’s insurance company initially pays for the damages, the insurer can still sue you to recover the costs.
Compensation for Harm You Cause Others
Millions of people go to hospitals every year for accident-related injuries. In Wisconsin, at-fault drivers are legally and financially responsible for the injuries they cause, as well as any related costs; this can include medical bills, rehabilitative costs, emotional distress damages, lost wages, and even punitive damages for drivers who exhibited neglect in causing the accident. Bodily injury liability insurance is designed to compensate injured victims and protect your personal income and assets against possible litigation.
Wisconsin mandates that all drivers to have at least the minimum bodily injury liability limits required by law, but those limits are typically insufficient for protecting against a major claim. If your limits are too low, you are personally responsible for any unpaid damages, which could be compensated through asset liquidation and wage garnishment. At Gutman Insurance, we recommend purchasing high-limit liability protection to preserve your current and future wealth.
Split Limits vs. Combined Single Limit (CSL)
There are two different types of limits available for bodily injury liability coverage – combined single limits (CSL) and split limits. A combined single limit is a single number on your policy that represents the amount of money in thousands that your insurer will pay toward bodily injury liability claims per accident. If your policy shows a 300 CSL, it means you have $300,000 of total bodily injury liability coverage.
A split limit is more restrictive in how funds are allocated. Split limits have two different numbers. The first is the amount of money in thousands available to each victim in an accident. The second number is the amount in thousands the insurer will pay for the injuries of all victims combined. If your insurance shows a 250/500 split, it means you have up to $250,000 of coverage per individual and up to $500,000 total bodily injury coverage per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
It is illegal and irresponsible to drive without car insurance, but that does not stop more than 11 percent of Wisconsin drivers from doing it. Uninsured motorist protection (UI) allows you to take matters into your own hands, ensuring you and your passengers have coverage if you are injured by an uninsured driver or in a hit-and-run. We also offer underinsured motorist protection (UIM) to take care of damages more than an at-fault driver’s low liability coverage limits.
Money to Help with the Little Things
An accident can cost you much more than just your deductible. In many cases, there are also towing charges, as well as the cost of renting a car while your vehicle is repaired. If you or your passengers are injured, you might also have medical co-pays and health insurance deductibles to cover. Why pay out-of-pocket if you don’t have to? Talk to an agent here at Gutman Insurance about adding medical payments coverage, as well as additional protection for the ‘little things.’
Beyond Car Insurance
Though not part of your car insurance policy, umbrella insurance is a very important type of coverage that works hand-in-hand with the liability protection your car insurance provides. An umbrella policy is supplementary liability protection that extends your liability coverage when you reach the maximum limits on your primary coverage. For example, if you have $250,000 in bodily injury liability coverage but are sued for $1 million, your car insurance would pay the first $250,000, and your umbrella policy could pick up the remaining $750,000 – all without touching your personal income or assets.
Many drivers are surprised to find out how affordable umbrella insurance can be. With coverage that typically ranges between $1-6 million, we strongly urge our customers to consider adding an umbrella policy to their insurance portfolios. For more information or to find out how an umbrella policy could protect your future income and assets, contact our office today.