Car Insurance Buying Tips
I wish everyone knew what my 20+ years of law and insurance claims experience has taught me: that most people do not understand their car insurance coverages, and often err on the side of saving a relatively few dollars rather than adequately protecting themselves, their family, and their passengers.
Please click here to read the Metropolitan magazine’s feature article about the background, experience, and civic involvement of the husband and wife team of accident attorneys J. Scott Robertson and Laura E. Robertson. Please feel free to call us today at 410-749-9111 for a free initial consultation.
I’ve lost count of how many people I have seen that were shocked to find out that they had inadequate car insurance when they needed it most. They wanted to save a few dollars and essentially played Russian Roulette—and lost, costing themselves or their family tens (or hundreds) of thousands of dollars and creating huge financial hardships. I cannot describe the gut-wrenching feeling they felt, but I saw it on their faces.
Please take a few moments to read these five tips. You will then be in a better position to discuss your car insurance with your local insurance agent and get the best coverage for your money. It is very important to make good decisions in purchasing car insurance, as it is too late to retroactively increase your coverages once the accident happens and someone is injured or killed. Please do not wait until it’s too late.
Tip 1: A SMALL additional premium will buy a MUCH BETTER policy. Let me repeat: It only costs a small additional premium to buy a much larger car insurance policy. And most of the increased premium can be offset by raising your property damage deductible. Conversely, when you try to save a relatively small amount on your premium—say 15%—you oftentimes will end up with only a fraction of the protection. Gutting your coverage to save a few dollars is not smart and leaves you, your family, and your passengers vulnerable in many ways.
Tip 2: Consult a LOCAL insurance agent to discuss your individual situation to determine the best amount of coverage. Local insurance agents provide a very valuable service—personal and objective advice based on your individual situation. In my experience people who buy insurance online or from a “1-800 number” often do not receive good advice and on occasion are unknowingly switched to inferior coverage. The amount of coverage you should buy varies depending upon your life situation, your salary and net worth, and a variety of other factors. Take 10 minutes to discuss your situation with an experienced and knowledgeable local agent—you will be glad you did if you are ever involved in an accident, regardless of whether it is your fault.
Tip 3: Carry an adequate amount of Liability Coverage. No matter how carefully we drive, accidents can happen. Are you adequately covered if you cause an accident resulting in serious injury to someone else – including your passengers? Will there be enough insurance to pay for their medical bills and other damages? Unfortunately, most people cannot answer this question. And worse, mare underinsured.
In my professional opinion, everyone should carry at an absolute minimum $100,000 per person and $300,000 per occurrence of both bodily injury liability and uninsured motorist coverage. But even this amount will prove inadequate if there are serious injuries or death caused by a collision. High wage earners or those with net worth should have several times that amount of coverage and should discuss the possibility of a low-cost personal umbrella policy with their agent. Otherwise, your assets might be at risk and you might be unable to pay for the damage that you cause if you ever have a momentary lapse of attention while driving.
Would you buy health insurance that provided only $30,000 or $50,000 of coverage? Of course not. Such a small policy would not protect you against major medical bills. Similarly, you should not buy car insurance with those low limits. No matter how careful you are, you can cause an accident. Are you prepared to pay someone else’s medical bills, lost income, and other damages with your hard-earned money or the equity in your home? If not, buy a good policy. The minimum policy limits required under law are insufficient unless you are prepared to lose your assets or file bankruptcy if you cause an accident resulting in serious injuries.
Tip 4: Understand Uninsured Motorist (“UM”) coverage. UM Coverage is probably the most misunderstood aspect of car insurance policies but is one of the most important. USA Today (9/12/11) recently reported that “1 in 7 Motorists are Uninsured.” What?! Isn’t insurance required? Yes, but unfortunately, many motorists fail to pay a month premium and thereby allow their insurance to lapse. UM steps in and covers you if one of those drivers hit you or your family members. UM coverage also protects against hit-and-run drivers.
It is also important to know that UM also provides coverage when the other driver is not adequately insured (commonly called “underinsured motorist coverage”). Keep in mind that many insured drivers only have the statutory minimum bodily injury liability coverage ($30,000 in Maryland, only $15,000 in Delaware), which is not adequate to cover you or your family if you suffer anything other than minor injuries in an accident. If you are hit by an uninsured, underinsured, or hit-and-run driver, you need good UM coverage. It will step in, just as if the at-fault driver had much higher coverage limits.
Tip 5: Your liability and UM coverage may protect you and your family members, even if your car is not involved. You and your resident relatives are often covered by your insurance, even if your car is not involved in the accident. Your policy will often provide coverage when you rent a replacement vehicle, when you or a family member is driving or riding in someone else’s car, or a multitude of other scenarios. Policies can vary, so ask you agent about these issues.