Why You Need Auto Insurance To Protect Yourself

You’ve worked hard to get the car you want, as well as any personal possessions you value. Auto insurance can cover more than your cars. It can also protect your personal possessions.

Auto insurance covers more than your vehicle, RV, or motorcycle. If you are involved in an accident, and you are found to be at fault, insurance can protect you from losing your assets. It is important to understand that every state has different liability laws. Each state also has different minimum coverage requirements.

Insurance can help you minimize your responsibility for any damages that you cause or are liable for. You can choose the coverage you need or want when you buy a policy. If you have a lien on your vehicle, it may determine the coverage you need. Consider the value of your personal assets. This is because, although your insurance company is obligated to defend you within your policy limits and coverages, a claimant, or the person to whom you caused injury, may attempt to sue you personally if your policy limits are inadequate for their injuries and property damage.

This can be illustrated by an example: Your current insurance policy has the following limits: Property damage $15,000, bodily injury $15,000/$30,000. The bodily injury limits allow for coverage up to $25,000 for any one person who is injured, and $30,000 for all other injured parties. For demonstration purposes, let’s say there were three people in the car with the injured persons and that you were at fault. The driver sustained serious injuries, including a broken hip, severe lacerations to his face, and a broken arm. Two other passengers were also injured in the accident. They suffered soft tissue injuries to their backs as well as cuts from broken glass. As a manager and claims adjuster, I know that this claim will exceed the policy limits of $30,000 for all parties.

Keep in mind that your insurance company is required to defend you and settle your claim within the policy limits. An attorney can be hired by the injured parties to do their due diligence and determine if there are any assets or high net worth individuals. If you are found to be, your attorney might decide to pursue your policy limits and then go after your personal assets. This can happen, and you and your assets may be at risk.

This example and the potential for it to become a real-life risk in terms of your personal assets being at high risk, can be avoided by having adequate insurance coverage. How? How? By understanding your financial situation and making sure you are covered for your entire family. It’s worth taking the time to review your Declarations page to see what your current coverage limits. Then, if you feel that you don’t have enough coverage, go to an impartial, consumer-focused site that will give you free auto insurance quotes to determine the right amount.