Because You Asked:
“Do I have Enough Insurance?”
To be honest, I don’t know if you have enough. I don’t even know if you are paying for more coverage than you need. But let’s ask ourselves a couple of questions before we dive deep into finding these answers. I often hear people talk about ‘full coverage’; what does that mean to you? Do you assume it means that everything will be covered by your policy after an auto accident – – – no matter what? Do you believe that your policy will pay for the other persons injury, no matter what the extent or length of time it takes for the other person to fully recover? Or does “full coverage” simply mean that your automobile has coverage for if, or when, it is damaged?
“Full coverage” is a term that I try to not use when discussing insurance with my clients. It’s a widely used term yet, there is no set definition. All to often people believe it means one thing just to find out later, it doesn’t. In order to address the question, “am I paying for too much insurance”, we actually need to focus on your liability insurance. The question now becomes, “how much liability insurance do I need”; and better yet, who decides what is ‘enough’ versus ‘too much?’
I sometimes suggest you buy as much as you can afford or as little as you can stand to lose. Simply put, ask yourself what is at risk if you do not have enough liability insurance to cover all the costs associated with an accident you are found to have caused. Nobody can predict how a major claim will turn out – but the very best you can do is protect yourself and your family by insuring for the worst-case scenario. Isn’t that what insurance is for?
Back to the question: How much liability insurance do I need? Another way to think about it is to consider what you have. Did you save up a nice nest egg? Do you have a steady income? How much equity have you built into your home? These considerations may help in deciding to keep or even increase your liability limits to prevent using these hard earned funds to pay off a liability to another. You can also consider what you want someday. Do you want to buy a home? Would you like a newer car? Do you hope to help your children with college costs or plan to retire soon? How would low liability limits on your auto policy, which did not satisfy an injured needs and then had to be paid out of your future savings, offset your dreams?
If nothing else, I hope this encourages you to review the limits on your policy. I also hope you see that there could be a real cost to not having enough liability insurance. People are often shocked to learn that increasing their liability coverage on their auto policy doesn’t increase the premium by only a mere few dollars. Give us a call for a quick review of what you have, or to learn what you don’t have, in your auto policy! Don’t wait to be surprised and find out it is too late to make a change.