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How much coverage do I really need?

By April 11, 2022No Comments

By: Austin Peek

Do I have enough coverage?

In the state of Georgia, you are legally only required to carry liability limits of $25/50/25k on your auto insurance coverage. You may be asking yourself, “If this is all I legally have to carry, then why would I need higher limits, after all, I am a good driver and would rather just cover any additional cost myself.” That is a great point, you may be a great driver with a clean record and see no value in paying a higher premium for higher limits in case you get into an accident, but what if…. What if on that rainy Friday you get into an accident that you never saw coming. Would you want to be forced to drain your savings, or worse, have your assets liquidated, just to save a few dollars each month on your premium? Saving a few dollars each month now could cost you thousands in the future. Holding lower limits can leave you and your family extremely vulnerable to losing everything you have worked so hard to obtain. This can sound extreme, but it happens, and we do not want to see this happen to you. Liability Limits of $100/300/100k are truly the baseline standard you and your family should consider. Insurance is like an investment, if you are going to pay for it, you want it to be there to provide for you when you need it. Would you want to purchase an insurance plan that leaves you with a bill after a claim or purchase insurance that returns you to your original position without any additional bill? You would not purchase an umbrella with holes in it, because the goal is to protect you when it rains, and insurance is no different. Have peace of mind in knowing that your insurance plan is going to adequately protect you.

What do the limits even mean?

You have heard this talk on liability limits for your auto and seen it on your policies but may still be wondering what the numbers mean, so allow me to provide some clarity. There are two forms of liability limits, split limits and combined single limits. 

  • Split Limits: The most common form, Individual limits for bodily injury and property damage liability 
    • Example of Split Limits: $100/300/100k broken down as:
      • $100k: Maximum of $100k for bodily injury PER PERSON injured
      • $300k: Maximum of $300k for bodily injury PER ACCIDENT TOTAL
      • $100k: Maximum of $100k for all damaged property, i.e., vehicles, boats, trailers, etc.
  • Combined Single Limit: One combined limit to cover total bodily injury and property damage
    • Example of a combined single limit: $500k covering all bodily injury and property damage

We encourage all consumers to hold limits of $100/300/100k, however the optimal protection desired for all individuals are split limits of $250/500/250k with an umbrella policy. What would an accident resulting in $500k of liability claims do to you and your family without proper coverage? 

Not only are there different types of liability limits, but there are also two forms of liability coverage. 

  1. Liability Limits: Cover the other party if you are at-fault, discussed above
  2. Uninsured/ Underinsured Motorist: Limits that mirror the others and protect you and your family if an uninsured or underinsured drive hits you.
    • Example: A driver carrying state minimum coverage runs a red light, or merges into your lane on the highway and totals your brand new 2022 Toyota 4Runner. As a result, you suffered minor injuries and you need several doctor’s appointments to recover, and potentially physical therapy. The other party’s state minimum limits are not enough to pay you what you are owed. Luckily, you carry adequate coverage that takes care of the difference, and you can replace your new vehicle and all medical expenses are paid. 

Why should I increase my limits?

Now that we have discussed what the limits mean and how they cover you as the responsible party in the event of an at-fault accident, it is important to understand why. Even if you have been driving for 30 years accident free, there is always the risk of getting involved in an accident and being underinsured or hit by a driver that is uninsured or underinsured. Due to an increased number of drivers, traveling and distractions, the number of accidents continues to rise each year. Accidents increased an average of 17% last year, which shifts the conversation to “when” rather than “if”. Below are some statistics provided by Gary Martin Hays on the State of Georgia in 2020.

  • 330,000 Accidents
    • 1,588 Accident leading to fatalities
      • 1,730 individuals killed
        • 125,000 injured 
  • The State of Georgia is 4th in the nation for number of fatal accidents

An average hospitalization for a car accident can cost over $50k. Brain injuries, spinal injuries or limb amputation can raise medical cost tremendously. The cost to settle the fatality of an injured party can be around $1M. A minor accident can leave you liable for claims of just a few thousand dollars, but what about a moderate to severe accident? Even Costs of new and luxury vehicles continue to increase, and the cost to repair them, which makes more coverage necessary. Georgia has one of the highest litigation and accident rates in the country, meaning people are very quick to take an accident to court to sue the other party. Additional litigation fees max-out policy limitations very quickly, which also makes the umbrella policy necessary. The more assets you have, the more courts can hold against you in liquidation efforts of lawsuits. Those with multiple assets, multiple drivers or heavier in travel should be focused on protecting what they have. The lower your coverage, the less protection you have against a potential lawsuit and for you through your matching UM coverage. By carrying limits of $100/300/100k or higher you have a better peace of mind that you and your family will be taken care of when a driver who may not have any insurance or is carrying state minimum causes an accident.

There are number of various scenarios on why it is recommended that you hold higher than minimum limits, but they key focus is to make sure that you and your family are protected and taken care of if an accident occurs. Let us help you make sure no holes are in your “umbrella” for the rainy day. Are you adequately covered?

Call us today to learn more about how you can protect you and your family!

Georgia’s Fatal Crash Stats | 2020-2021 | Law Offices of Gary Martin Hays & Associates, P.C.