Have you ever seen a car insurance commercial or advertisement suggest they’ll get you more coverage? Not usually. That is because more coverage almost always equates to higher expenses. For the average consumer, that’s not the message they are looking for. The sexy ad promotes cheap liability car insurance.
But cheap doesn’t always mean inexpensive. Saving money, while certainly nice, is not the most important benefit of maintaining car insurance. In fact, having this cheap liability car insurance could end up costing you much more in the long run.
What is cheap liability car insurance, really?
If you have low rates on your car insurance, it doesn’t necessarily mean that you have poor coverage. You could be a great driver, avoid accidents, and have a practical car. All of these factors contribute to lower rates on your car insurance.
Still, the rates that many companies promote are not the cheaper coverages that you want. Cheap liability car insurance is often synonymous with low liability car insurance. This means if you do get in an accident and need to rely on your car insurance to help you cover damages that you are liable for, you might not get much help.
Most states require liability insurance coverage, but the amount you have will impact the way it works for you. Understanding coverage limits of your car insurance is important. Reading through these coverage limits in your plan can be the difference between having liability insurance you are comfortable with or having cheap liability car insurance that will leave you in a tight spot.
3 Important auto insurance coverage definitions (Yes, you really do need to know these.)
1. Property damage limit
This is the amount your insurance will cover for property damage as a result of an accident that is your fault. The insurance will not pay any more than the amount indicated by your property damage limit and you will be held liable for any damage caused over this amount.
This is important, since damages that sometimes seem simple can result in more required work than you’d expect. Lower property damage limits can reduce your monthly premiums, but leave you paying astronomical amounts for damage you cause.
In other words, your $50,000 limit will run out real fast if you drive your large pick-up truck into a brand new Lamborghini. I’d certainly like to buy a Lamborghini someday, but I’d rather not pay for someone else’s.
2. Bodily injury per person limit
This indicates the maximum amount of money that your insurance company will pay to cover injuries to each individual person in an accident that is your fault. So, if two people get injured in an accident that’s your fault and your bodily injury per person limit is $5,000, your insurance will contribute $5,000, and no more, to each of the injured parties as needed.
Having a high liability coverage here can protect you from paying a lot out of pocket for injuring a single person, but you’ll want to take the next liability coverage into account when there are multiple people that could be injured.
Bodily injury per accident limit
The bodily injury per accident limit is important because it can impact the coverage you’ll get through your bodily injury per person liability. The per accident limit sets a maximum your company will pay in total for all people injured in an accident that is your fault.
For example, you could have a $20,000 per person limit and a $60,000 per accident limit. If you caused a large accident that injured eight people who each need $10,000 of medical care, even though each individual is below your per person limit, the total liability of the accident is $20,000 over your per accident limit leaving you to take care of that expense yourself.
This is why these liability limits are often sold in packages that correspond with one another in some significant way. You must understand how your liability coverage is working for you to be protected to a degree you are comfortable with.
How often do you change your car insurance coverage to a cheaper option? Has doing so made you feel safer while driving?