This post is part two of the blog post that answers the question “How much car insurance is enough?”
Compensation for Harm You Cause Others
Car accidents often cause injuries, which may require hospital stays, rehabilitation, and time off work. In Wisconsin, at-fault drivers are legally and financially responsible for the damages they cause in an accident – including injury-related expenses. In addition to medical expenses and lost wages, a victim can also pursue an at-fault driver for emotional distress compensation and other costs. A jury could also impose punitive damages if it determines the driver was texting behind the wheel, intoxicated, or in some other way negligent in causing the accident. Ultimately, it does not matter how the accident happened; all that matters is that it did and the at-fault driver is accountable. If that driver happens to be you some day, make sure you are prepared for the financial fallout.
Bodily injury liability insurance provides compensation to victims for injury-related expenses when you are liable for an accident. Though the coverage is mandatory in Wisconsin, the minimum coverage limits are too low to protect your income and assets against a large claim fully. If you are sued for $500,000, but only have $50,000 of bodily injury liability coverage, how will you pay for the remaining damages? Would you have to liquidate your savings and investments? Perhaps you would face wage garnishment in the years to come. How would those events derail your finances and plans for the future?
At Frydach Insurance, we recommend increasing your bodily injury liability limits far above the minimum required by law. For many Germantown area drivers, it could be the single step that prevents financial ruin after a major collision.
Split Limits vs. Combined Single Limit (CSL)
When you select your bodily injury liability limits, you will be offered coverage as either a combined single limit (CSL) or a split limit. Both can feature broad liability protection after an accident, but they differ in the way they provide coverage. A combined single limit has only one limit – the maximum total bodily injury liability coverage for all victims of an accident combined. A 300 CSL, for example, could allocate up to $300,000 to a single victim or divide it among multiple injured parties.
A split limit has two limits – the maximum total bodily injury liability coverage per accident, as well as per individual. Split limits appear on your insurance policy as two numbers, such as 250/500. The first number in this example would represent a maximum individual bodily injury liability coverage amount of $250,000. The second indicates the insurer will pay up to $500,000 for bodily injury liability damages for all victims combined.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Driving without insurance is illegal and dangerous, yet more than 1 in 10 Wisconsin drivers are currently guilty of doing so. If you are injured by one of these drivers, uninsured motorist insurance (UI) can provide coverage for injuries you and your passengers sustained in the accident. We also recommend adding underinsured motorist insurance (UIM), which can help cover your losses if an at-fault driver’s liability coverage is insufficient to meet your needs.
Money to Help with the Little Things
In addition to the physical damages, liability, and injury-related expenses after an accident, there are also secondary costs that can quickly add up without the right coverage. For example, renting a car while your vehicle is being repaired could cost hundreds of dollars. Likewise, you could face out-of-pocket health insurance deductibles, co-pays, and towing charges. Avoid financial burdens after a collision by adding coverage to your policy that helps pay for the ‘little things.’
Beyond Car Insurance
Beyond your car insurance policy, you may still need additional liability protection to pay for major claims. Even the highest car insurance limits cannot cover a million-dollar lawsuit in its entirety. Rather than have hundreds of thousands of dollars to pay out-of-pocket even after you exhaust the limits on your policy, consider purchasing an umbrella policy that will extend your liability protection by an additional $1 million or more.
Umbrella insurance is supplementary liability protection that pays after you exceed the limits on your primary coverage. This high-limit coverage can safeguard your income and assets against financial ruin in the event you cause a major liability, such as a disability or a fatality. This affordable coverage could be the very thing that protects your family against financial devastation.
For more information about umbrella insurance or any of the other coverage types mentioned in this post, contact our office today.