This post is part two of the blog post that answers the question “How much car insurance is enough?”
Compensation for Harm You Cause Others
Of course, property damage is not the only liability you could obtain after causing a car accident. If the collision happens to injure a victim – whether a pedestrian, cyclist or another driver – you may have a much bigger problem on your hands. After an accident, a jury may order you to pay damages to a victim to cover the cost of medical bills, lost wages, emotional distress, and more. You could also face punitive damages – especially if you were texting while driving or intoxicated at the time of the accident.
Bodily injury liability insurance can financially protect you against injury-related lawsuits, but only up to the limits of your policy. If you stick with only the minimum coverage required by the state, you could be personally responsible for hundreds of thousands of dollars in any unpaid damages that exceed the limits of your coverage. If you do not have enough money to pay the liability out-of-pocket, a judge could order the liquidation of your assets or even garnishment of your future wages to satisfy the debt.
Bodily Injury Liability Coverage Options
Insurance companies may offer bodily injury liability as a combined single limit (CSL) or a split limit. Combined single limits are a flat amount that the insurer is willing to pay for the combined bodily injury liability of all victims involved in an accident. For instance, a 300 CSL represents $300,000 in total available coverage that can be divided up between multiple victims or designated in its entirety to a single victim.
The other type of coverage – split limit coverage – may be expressed as two numbers separated by a forward slash (i.e. 25/50 or 250/500). The first number represents in thousands the maximum amount of bodily injury liability coverage available to each victim in an accident. The second number is the amount in thousands that total bodily injury coverage is capped at per accidents for all victims combined. Currently, Wisconsin requires a minimum 25/50 split, but we here at G&L Insurance recommend much more coverage to minimize your financial risk.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
It may be a law that all drivers carry liability insurance in Wisconsin, but not all drivers do. If you are hit by an uninsured driver or a driver with too little insurance to cover your needs, the uninsured motorist (UI) or underinsured motorist (UIM) protection on your policy can pick up the slack for you and your passengers. Both UI and UIM are very important, if not the most important coverage types on your policy. They ensure that your needs will be met even if the responsible party cannot pay.
Money to Help with the Smaller Things
Sometimes it’s the little things that can add up. Fortunately, your car insurance policy can take care of much more than your injuries, vehicle damages, and liability. In fact, you can custom-tailor your insurance to provide a wide range of coverages, including towing charges, rental car fees, and payments to help cover your health insurance deductible regardless of who is at-fault for your injuries.
Beyond Car Insurance
Some accidents result in extreme liability, such as in the case of a driver who permanently paralyzes a young doctor who would have had decades of future income. The medical bills alone can quickly consume even the highest bodily injury liability limits, potentially leaving hundreds of thousands or even millions of dollars in compensation for lost wages, emotional distress, and future medical needs. Once you reach the maximum on your primary insurance limits, an umbrella policy can provide supplemental protection, extending your liability coverage by $1 million or more. Without it, you could lose your savings and face a lifetime of wage garnishments to help satisfy a major liability. Fortunately, umbrella policies are very affordable and versatile. Contact us here at G&L Insurance to find out if supplemental liability protection could better protect your assets and minimize your financial risk vulnerability.