#1 The danger of 25/65 in bodily injury liability coverage
This is the coverage that protects you from being sued should you be the at-fault driver in an accident and injure someone. The 25 refers to a limit of $25,000 per person that you injure. Your insurance will pay up to $25,000 for one person’s injuries. Any amount above that, you are responsible for. What if someone lost a limb or the ability to earn a living because of an accident that you caused? $25,000 would certainly not be sufficient. The 65 refers to $65,000 which would be the total amount that our insurance would pay for an incident. If three people were in the other car and each one had medical bills for $30,000, you would be responsible for any amount over $65,000 which would be $25,000.
#2 The danger of having only $15,000 in property liability coverage
Property liability coverage refers to damage that you cause to someone else’s property. What is your car brakes went out and your car knocked down the wall of a house? What if you hit a $60,000 Mercedes? In both cases, you would be financially responsible for the amount over $15,000. With so many expensive vehicles on the road it would not be difficult to reach that amount for repairs to a damaged car.
#3 The danger of having only the required $3,000 in PIP
PIP refers to Personal Injury Protection coverage. This is a required coverage in the state of Utah and is important because it allows everyone the benefit of medical coverage whether they are at-fault in the accident or not. Some states do not require this coverage at all. But Utah is a no-fault state meaning no-fault has to be proven for the medical coverage to kick in. The danger of having the lowest limit which is $3,000 is that it is not nearly enough coverage in an instance of a serious injury. A ride in an ambulance and an emergency room visit will pretty much eat up that amount right off the bat.
Your PIP of $3,000 would also be the limit of what your insurance would pay should you be driving with passengers in your car when an accident occurred. What if you lost control of your on a patch of black ice and careened off into a ditch. If you have several friends in your car that sustained serious injuries, the $3,000 PIP for each one would probably not be sufficient for their medical costs. Imagine the devastation you would feel at not being able to adequately cover their financial burdens because of an accident that happened in our vehicle.
#4 The danger of not having comprehensive and collision coverage for your own vehicle
Comprehensive and collision coverage are both optional coverages. These are the ones that cover actual physical damage to your vehicle You can choose higher deductibles to help keep your premium down if you like. Any deductible that you choose would be deducted from the amount that the insurance would pay for damages to your automobile. For instance if you backed into your garage and damaged your car in the amount of $1,800 and your collision coverage carried a $500 deductible, then $500 would be deducted form $1,800 and you would receive $1,300 for the repairs. You would be responsible to come up with the other $500 for the auto body shop. The collision coverage covers only collisions.
Comprehensive coverage covers anything else that might damage your car. Hail, wind, ice, fire or vandalism. This is also the coverage that kicks in when a rock hits your windshield on the freeway and cracks it. It usually carries a deductible also. Comprehensive and collision coverage are the most expensive coverages because they are determined by the value of your car. The newer and more expensive your car is, the higher the premium for this coverage will be.
These coverages are optional unless you have a lienholder on the car. The lender will require that their financial interest in the car is covered should the vehicle sustain any damage that would decrease it’s value. If our insurance coverage ever lapses, your insurance carrier will notify your lender and they can add their own insurance premium onto your loan. This is very expensive and carries high deductible and you do not want this to happen.
Should you decide that you do not want to carry comprehensive and collision on your car, just be sure that you will be able to afford to replace or repair the damage in the event of an accident. If your car is old and not worth very much then skipping the coverage may be smart financially because of the premium you would save.
#5 The dangers of not having any UM/UIM coverage
UM refers to uninsured motorist and UIM refers to underinsured motorist. You may ask yourself why you would need to carry insurance in case the other guy doesn’t have it when it is required by law. This is a good question and the answer is because some people break the law and drive without insurance and some make poor decisions and choose the minimum state required liability amounts. These same drivers are likely the ones that are careless drivers and are out causing accidents. If they happen to hit you, you want to protect yourself and your passengers. The premium for this insurance coverage is minimal and well worth the extra few dollars in premium.
It is in your best interest to sit down with your insurance agent and look over each of your coverages to be sure that your limits are sufficient and responsible for your needs now and in the future.