An Ounce of Prevention is Worth A Pound of Cure: Especially With Auto Insurance

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     With the universal need for auto insurance and the rising financial burden placed on us from all aspects of our lives, a growing number of people have been exploring the minimum requirements for insurance coverage.  This raises several issues in the event of an accident for not only the driver at fault, but also the other vehicle(s)’s operator.  Each insurance minimum coverage amount is set by the state; a common minimum is a 25,000/50,000 liability policy; though it can be lower in some states.  This means that your per-occurrence maximum payout for damages done to another person or their property is $25,000 and the aggregate limit of payout for the policy is $50,000.  Anyone who has been to the emergency room for any reason can tell you how fast that limit would be reached and exceeded.

This opens a figurative can of worms for both the insured driver and the driver that was hit.  Once the policy limits are paid, the financial responsibilities fall onto the insured driver which opens the door for expensive and draining legal actions by the non-at-fault party.  These minimum limits also only apply to damages to the other person; this leaves the insured paying all of their own auto repairs and medical bills in the absence of other medical insurance.  The lure of cost cutting on an intangible necessity in a world where financial burdens are escalating is hard to resist, but those who are loath to pay more for preventative measures often pay a much higher price when something goes wrong.

While the issues of being under-insured are important to understand, it is a trade-off that some people will continue to make.  A savvy driver should protect themselves from having to seek indemnity via the legal system in the event that they are hit by an uninsured driver or one who has minimum limits.  All auto policies have a section that includes coverage for being hit by these types of drivers.  It is required in a few states, but can be excluded at the request of the insured in Georgia, Florida, and most other states.  This part of the policy will pay up to the limits on your policy above what the other driver’s insurance will cover for damages.  In other words, if the at-fault driver has a $25,000 per-occurrence limit and hits you, causing $105,000 in damage, then your insurance will cover the $80,000 deficit.

Again, the elective rejection of un/under-insured motorist coverage is a trade-off.  The premium will drop if it is excluded, but if you end up in an accident with one of the many under-insured drivers on the road, then the costs and headaches of seeking damages will far outweigh the cost of prevention.  The axiom of defensive driving holds true in this situation: It’s about how prepared you are to handle the other driver’s ill-preparedness.

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