How much insurance coverage is sufficient?

Do You Have Sufficient Insurance Coverage? Driving a vehicle in today’s society you are legally obligated to insure yourself in the event your actions cause harm to others. You also want to insure yourself against the other hazards posed to you on the roadway, i.e. underinsured drivers, drunk drivers, or drivers with no insurance at all. Let’s say you, with your wife and two children, own a home, two cars, a boat, and a vacation home. You of course look to an insurance company to protect your assets. Either you contact an agent or you get on line to check boxes to create your own policy. Regardless of which route taken most people focus on how much is this coverage going to cost me a month and like other things in our lives, we tend to skimp to save a little. Problem is, the amount you’re saving in no way justifies what your skimping on.

The family above decides to get a motor vehicle liability policy of 100/300, that is, $100,000 per person or $300,000 per incident. They feel $100,000 is adequate to protect their investments. What they don’t understand is the cost of medical care; ambulance to the hospital, admitted for a couple of days, perhaps a surgery and medical costs can already exceed $100,000. A savvy lawyer may look at the family’s assets and conclude the family is capable of contributing to that single limit policy of $100,000 so before they agree to settle the matter that attorney can compel that family to pay out of their own pocket.

The cost difference on a policy of 100/300 and say 250/500 is so nominal there is no argument justifying not paying the additional amount to have the additional coverage. Furthermore, given the numerous policies our family needs a $1,000,000 umbrella policy makes sense. This umbrella would kick in to provide coverage for any claim that exceeded the policy on the car, boat, home. It costs in the ballpark of a couple hundred dollars a year to have.

Lastly, and this one gets me every time: the aforementioned family has a good liability policy of 100/300 but saved a few dollars by having 25/50 on their uninsured motorist’s policy. This part of your motor vehicle policy is for you, to protect you against the uninsured and underinsured drivers. The family hurts themselves by not getting at least limits equal to the liability limits. When you want to insure yourself against other drivers on the road make sure you have good uninsured motorist’s limits. If the time comes that you need to access that portion of the policy you will be glad you paid a little more to have high limits.

I carry a $500,000 flat limit for my two cars and have a $1,000,000 umbrella. The umbrella doubles and underinsured coverage as well so it costs a bit more, approximately $400 a year. Well worth it in the event the need arises.

Save money but don’t save it when it comes to having sufficient insurance. I’m not the biggest fan of the insurance industry but when it comes to your own policy it can turn out to be your best friend.