Insurance Continuing Education – Tips for Purchasing Car Insurance

The 3 areas that the typical auto premium dollar are allocated to would be: Bodily Injury Coverage, Colli­sion and Property Dam­age Coverage.  We will discuss these 3 first.

Bodily Injury Liability – This is the coverage which most protects against financial ruin. As noted before, this coverage pays for the other

person’s medical treatments rehabilitation or funeral costs when an insured is found to be at fault in an auto accident. Each state requires drivers to have some level of Liability Cover­age.  This coverage is absolutely essential! Determining the amount of the coverage is the question.  We believe 3 areas of this coverage should be ad­dressed.

1.  Protect Assets – This means that by pur­chasing enough insurance to cover the highest judgment one might reasonably be called upon to pay, the consumer has effectively become lawsuit proof.  If the insured does not own much besides the car, and then they should buy only the minimum that the state requires, possibly $10,000 for each person injured, up to a cap of $20,000 for the whole accident. Although one could be sued for more, it is unlikely be  cause there is no chance of payment.  By contrast, a homeowner might want to insure $100,000 for each person injured, with a maximum of $300,000 per accident, or even a straight $300,000 per accident.  The wealthy should consider $500,000 to $1,000,000 worth of coverage or more.  The richer, the more protection needed.

2.  Protect yourself – If one is hurt by a dri­ver who is uninsured (or under-insured), he/she can be covered by their own policy.  One cannot collect any more than he/she bought to protect the other individual.  A $10,000 cap for the other individual means a $10,000 for the insured also.

• Protect the Injured – Drivers have a social and moral obligation to every­one else on the road.  If one damages a life they should pay for it.  That means buying a substantial insurance policy even if he/she doesn’t have a lot of assets to protect.

Collision Coverage – Essential for new cars, useful as long as a car has sufficient value.  This portion of the policy cov­ers repairs to the insured’s own car after an accident, no matter who caused it.  If the car is totaled and it was fi­nanced, the insured will need the insur­ance to repay the loan.

The price of Collision Insurance de­pends on the size of the deductible. The higher the deductible, the less the insurance will cost.  If the accident wasn’t the insured’s fault, the insured’s insurance company will arrange for the deductible to be paid by the other driv­er’s policy. Colli­sion Insurance is generally written to cover the cars’ Fair Market Value, define its book value (determined by standard tables), minus the cost of making repairs, minus a charge for unusually high mileage.

It would be wise to drop the coverage on cars so old or so dented that their value is nominal.  Our guess is that nominal means something under $15­,000.

Liability for Property Damage - This pays for someone else’s property, usual­ly the car, but sometimes a store front or gasoline pump.  We recommend that consumers at least cover the Fair Market Value of the average car, say $15,000, or $60,000 if one worries about hitting a new Mercedes.  Keep in mind, that the standard minimum is about $10,000 and it will not cost much to upgrade this portion of the liability to at least $25,000 at the same time the insured increased Bodily Injury Liability Cover­age.

Insurance Continuing Education

 

Continuing Education Insurance

 

Continuing Insurance Education