Don’t Cut Corners On Liability Coverage
According to preliminary numbers from the National Safety Council and the National Highway Traffic Safety Administration, deaths caused by automobile crashes increased up to 8% in 2020, despite having far fewer cars on the road — and 2021 is projected to be worse. It’s difficult to determine the cause of this unfortunate uptick, but one thing is certain from an insurance perspective: It’s more important than ever to have the correct policy limits.
When it comes to buying insurance, many folks focus on the deductible, and coverage limits become an afterthought. This is understandable, as the hit to the wallet from an auto repair looms large in our minds — more so than the theoretical worst-case scenario of maxing out liability limits. But this thinking is directly opposed to my motto: Insurance is primarily meant to provide access to very large sums of money when you need it most — not to pay for fender-bender repairs.
Lowering or raising your deductible only affects your financial exposure by a few thousand dollars — and usually not by a life-changing amount. Raising your limits, on the other hand, can lower your financial exposure by hundreds of thousands of dollars — an amount that could save you from bankruptcy. Ironically, it’s often cheaper to raise your limits than to lower your deductible.
The most commonly suggested limits are $100,000 per person/$300,000 per accident for bodily injury liability, and $100,000 per accident for property damage liability. This may sound like a lot of money. However, these limits can be woefully insufficient when a crash causes serious injury or death.
As the aforementioned statistic on crash deaths suggests, serious accidents have been happening more often than ever. It’s not at all hard to imagine a crash-related lawsuit exposing you to damages that exceed a $300,000 coverage limit by two or three times, and you’re on the hook for every dollar above your limit.
Being proactive with your coverage is key; act now before the unexpected becomes a reality. Contact your AAA insurance agent and discuss the possibility of raising your limits in a way that makes sense for your particular needs. Your premium may go up slightly, but you can probably raise your deductible to make up the difference. Regardless, you’ll be getting coverage that’s a better value and better prepares you for any worst-case scenario.
–Written by Michael Riley, Director of Sales of AAA Washington Insurance Agency, has more than 25 years of experience in the insurance industry and is a guest lecturer at Washington State University.
–This article appears in the spring 2002 edition of AAA Washington member magazine, Journey.
