Between 10% and 15% of all drivers in the United States fail to secure auto insurance coverage. In fact, the state of Wisconsin ranks 15th in the number of uninsured drivers, with 14.3% of their drivers not carrying any form of insurance coverage. And this number doesn’t even reflect the large portion of the underinsured drivers carrying policies that are likely to not provide them with the coverage they need in the event of a major accident. To understand the importance of liability coverage and why you should carefully review and select the appropriate limits. It is important to understand how each coverage protects you in the event of an accident.
Bodily Injury Coverage and Property Damage
These two types of coverages help to cover the costs you may be required to pay to others if you are found at fault for an accident. Bodily injury coverage pays for the costs associated with injuries that another person, besides yourself, may sustain as a result of the accident. Property damage will cover the costs to repair the damage to the other driver’s car.
Uninsured Motorist, Underinsured Motorist, and Uninsured Motorist Property Damage
What is UI and UIM? This is a common question for drivers who are trying to understand their insurance coverage better and determine the limits that will provide them with the protection they need. These coverages help to pay damage caused to you, your passengers, and your vehicle in the event you are in an accident with a motorist who is either uninsured or underinsured. Since they do not have the proper insurance to cover the costs of an accident when they are at fault, this coverage will help you to recoup the cost of damage from an accident from your insurance company that traditionally the other driver’s insurance would cover.
Why Minimum Coverages Are Not a Good Option
In all states, there is a minimum coverage amount that you will be required to carry to drive your vehicle on the road legally. While it may be tempting to go with the minimum options, it is not recommended. These minimums are not set to cover major vehicle damage or the potentially high costs of medical bills in the event you are involved in a major accident. The same is true for uninsured and underinsured coverages. A major accident with significant injuries could lead to $250,000 or more. If you only have the minimum coverage required, you are likely to have to pay out of pocket for vehicle repairs or medical costs for an accident that wasn’t even your fault.
Understanding Limit Types
When reviewing your coverages, it is essential to understand what the limit types mean for the varying types of coverages. The limits you will likely see with your insurance policy are split limits or combined single limits.
- Split Limits: You will typically see a split limit with your different coverages, such as 50/100. The first number shown will show the limit of coverage for each person, and the second number will be the cost per accident. So for the 50/100 split, you would have $50,000 coverage per person and a total of $100,000 for the complete accident.
- Combined Single Limits: You may also see your limit expressed as a single limit, such as 300. This would mean that you would have $300,000 available per person and $300,000 for the total accident. So if all the costs are associated with one passenger, they could use up to the total cost for the coverage of the accident.
How Is Coverage Affected by the Current Economic Environment?
With the current pandemic, and economic uncertainty surrounding it, many insurance companies are providing their policyholders with discounted premiums, as there are fewer cars on the road, and in turn, fewer accidents. Along with the discounted premiums, many companies are also offering deferred billing options, which will allow their customer to push off payments, to help them get through current financial hardships. Unfortunately, when this deferment comes to an end and the premiums are due, many people may still be unable to afford them, leading to a higher amount of uninsured drivers on the road. This makes carrying higher coverages for uninsured and underinsured motorists even more critical.
If you need advice about coverages and the limits that will work best for your situation, an independent insurance agent can help. Contact Brian Van De Hey Insurance today to ensure that you are properly protected in the event of an accident.