Insurance is meant to save you from financial disaster. But do you have enough of it and the right kind to help in a crisis? Put it to the test in the following Car accident scenario.
The Car accident stress test
Collision coverage: Let’s say you ram your car into something and cause extensive damage to your vehicle. About 72% of drivers carry collision coverage, according to the Property Casualty Insurers Association of America.
If you crash your car without collision insurance, you must pay the repair bills yourself or, if your car is beyond repair, foot the bill for a replacement vehicle.
Deductible: Now what if you’ve chosen a deductible for collision coverage that you can’t afford to pay?
State Farm, the nation’s largest insurer, says customers have been gradually shifting to higher deductibles over the past few years. That means you pay more upfront costs, and, if your deductible exceeds repair costs, you pay for all the repairs.
Liability coverage: Let’s say you crash into someone else. If you cause a car accident that damages someone else’s property or causes injuries, your liability insurance pays out. Unfortunately if you carry only your state’s minimum for liability coverage, you could be on the hook for some whopping bills. The injured party can come after your assets for damage amounts above your insurance limits.
The Insurance Information Institute recommends liability coverage of 100/300/50 (translating to $100,000 for injury liability for one person, $300,000 for all injuries per accident and $50,000 for property damage).
Uninsured motorist coverage: Now let’s imagine an uninsured motorist crashes into you, and fortunately you carry uninsured motorist coverage. In these economic times, it’s more important than ever to protect yourself against other drivers who fail to maintain proper coverage, or any coverage at all. The Insurance Research Council estimates that one in six drivers will be uninsured by next year.