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
Car accident liability extends beyond the damages you cause to someone’s personal property. If you cause harm to one or more victims in a car accident, you could be legally and financially responsible for their injuries, as well. Injury-related lawsuits can result in judgments or settlements valued at hundreds of thousands of dollars for compensation for medical bills, lost wages, and emotional distress. At-fault drivers may also face punitive damages due to negligence and legal infractions.
In Minnesota, all car insurance policies include coverage for bodily injury liability. This important coverage helps pay for your financial liability due to injuries you cause as an at-fault driver. The state mandates that all drivers carry at least the minimum required coverage, but we here at the Andreotti Agency recommend our Oakdale area customers purchase high-limit liability protection to safeguard against a major lawsuit. If your limits are too low, you are still responsible for paying any remaining damages that exceed your coverage. That could put your personal income, savings, assets, and financial future at risk.
Split Limits vs. Combined Single Limit (CSL)
When you purchase your car insurance, you will decide how much bodily injury liability insurance to include in your policy. Your insurer may offer you a combined single limit (CSL) or a split limit. Both offer valuable bodily injury liability protection, but the difference is in how compensation is distributed to victims.
A combined single limit appears as a single number on your policy that indicates the amount in thousands the insurer is willing to pay for all bodily injury liability combined in an accident. A 300 CSL, for example, pays up to $300,000 for all victims combined. A split limit appears as two different numbers on your policy, indicating in thousands the amount the insurer is willing to pay in bodily injury liability damages per victim and accident. A 250/500 split, for example, pays up to $250,000 per individual and $500,000 total compensation per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Minnesota car insurance includes a very important coverage called personal injury protection (PIP). This is the primary form of coverage for any injuries you and your passengers sustain in a car accident, regardless of who was at-fault. PIP comes with minimum coverage requirements, although you can select higher coverage if you prefer.
Of course, PIP does not necessarily remove financial responsibility from an at-fault driver who injures you and your passengers. If you are hit by an uninsured driver, recovering compensation for your damages may be difficult. With uninsured motorist protection (UI), you can protect yourself and your passengers if you are injured in a hit-and-run or by an uninsured driver. We also recommend underinsured motorist protection (UIM), which helps cover injury-related expenses that exceed the low limits on an underinsured driver’s policy.
Money to Help with the Little Things
To accurately estimate the costs after a collision, you must include the small expenses, too. That includes towing expenses and the cost of temporary transportation. Here at the Andreotti Agency, we can offer enhanced coverage options to help pay for the ‘little things.’
Beyond Car Insurance
If you choose the right limits and coverage, your car insurance policy should provide financial protection against most collision-related losses. However, there are some extreme cases in which even the highest liability limits fall short of covering a major settlement or judgment. In these cases, an umbrella policy can provide supplemental liability protection beyond the limits of your car insurance policy.
For example, imagine being sued for $1.25 million after you cause an accident that permanently disables a victim. You are responsible for emotional damages, current and future medical expenses, and the loss of future wages. Your car insurance covers $250,000 for the victim’s bodily injury liability, but you are still responsible for another $1 million in damages. For most drivers, that could mean complete financial devastation. With an umbrella policy, you would owe nothing, as your extended liability would cover the excess damages up to the limits of your policy.
Umbrella insurance is affordable and typically comes with coverage limits of $1 million or more. For more information about umbrella insurance or to find out if it’s right for you, contact our office today.