The Risks of Buying Minimum Limit Auto Insurance
Times are certainly tough.
I don't know too many folks that aren't scaling back on their expenses.
Just take a look at how sales are shaping up for retailers this holiday season.
From vacations to dining out, consumers are spending less wherever they can.
Which brings me to car insurance.
See, one pretty easy way to save a few bucks is to reduce your liability limits.
After all, minimum limits in most states are relatively low - and the lower your limits, the lower your premiums.
So why pay more than you have to, right? Wrong.
At least, if you have any assets at all to protect.
Here are some of the reasons why minimum limits auto insurance is a bad idea for most people: Minimum limits don't cover a heck of a lot.
Let's use Ohio as an example: the state requires drivers to carry liability limits of $12,500 per person/$25,000 per accident for bodily injury, and $7,500 per accident for property damage.
It's crazy to think that these limits will cover medical and repair/replacement expenses.
Do you know how much damage it takes to rack up $7,500 in car repairs? Not much.
If you don't have high enough limits to cover the other driver's expenses, you could be sued for the difference.
This puts your savings, home, and personal property at risk.
Just one accident can end up wiping you out.
Don't count on the other driver's uninsured motorist coverage picking up the tab.
Sure, they'll pay the driver's expenses, but insurance companies aren't in the business of losing money.
They're going to get it back...
from you.
The additional cost for higher limits is minimal.
Don't assume that if $25,000 in coverage costs $100 a month, then $50,000 in coverage will cost $200.
It doesn't work that way.
Depending on your particulars (driving history, age, etc.
), the higher coverage may only cost an extra $10 or so.
Thus, decreasing your limits won't save you all that much.
Many people, including agents, will tell you that carrying the minimum limits is fine if you're just starting out, and don't have any assets to protect.
But consider this: If you cause an accident, and the damages are more than your auto insurance will cover, do you really want a judgment on your record? If you are sued by an insurance company and can't pay, you're going to have a high time trying to rent an apartment, buy a car, or do much of anything else.
It can even affect your ability to get a job.
So while you may be content to cut back on your daily lattes at Starbucks or eat out less often, avoid reducing your car insurance limits if at all possible.
You'll be opening yourself up to the possibility of incurring phenomenally greater expenses than you could ever save on your insurance premiums.
I don't know too many folks that aren't scaling back on their expenses.
Just take a look at how sales are shaping up for retailers this holiday season.
From vacations to dining out, consumers are spending less wherever they can.
Which brings me to car insurance.
See, one pretty easy way to save a few bucks is to reduce your liability limits.
After all, minimum limits in most states are relatively low - and the lower your limits, the lower your premiums.
So why pay more than you have to, right? Wrong.
At least, if you have any assets at all to protect.
Here are some of the reasons why minimum limits auto insurance is a bad idea for most people: Minimum limits don't cover a heck of a lot.
Let's use Ohio as an example: the state requires drivers to carry liability limits of $12,500 per person/$25,000 per accident for bodily injury, and $7,500 per accident for property damage.
It's crazy to think that these limits will cover medical and repair/replacement expenses.
Do you know how much damage it takes to rack up $7,500 in car repairs? Not much.
If you don't have high enough limits to cover the other driver's expenses, you could be sued for the difference.
This puts your savings, home, and personal property at risk.
Just one accident can end up wiping you out.
Don't count on the other driver's uninsured motorist coverage picking up the tab.
Sure, they'll pay the driver's expenses, but insurance companies aren't in the business of losing money.
They're going to get it back...
from you.
The additional cost for higher limits is minimal.
Don't assume that if $25,000 in coverage costs $100 a month, then $50,000 in coverage will cost $200.
It doesn't work that way.
Depending on your particulars (driving history, age, etc.
), the higher coverage may only cost an extra $10 or so.
Thus, decreasing your limits won't save you all that much.
Many people, including agents, will tell you that carrying the minimum limits is fine if you're just starting out, and don't have any assets to protect.
But consider this: If you cause an accident, and the damages are more than your auto insurance will cover, do you really want a judgment on your record? If you are sued by an insurance company and can't pay, you're going to have a high time trying to rent an apartment, buy a car, or do much of anything else.
It can even affect your ability to get a job.
So while you may be content to cut back on your daily lattes at Starbucks or eat out less often, avoid reducing your car insurance limits if at all possible.
You'll be opening yourself up to the possibility of incurring phenomenally greater expenses than you could ever save on your insurance premiums.