How Much Car Insurance Do I Need?

Yes, yes, I know, every penny counts, especially nowadays! But the few dollars you may try to save on your car insurance bill may cost you dearly in the long run.

Lets start with the basics. In the State of Texas you are REQUIRED to have at least liability coverage on your vehicle. Liability insurance is that portion of your insurance which pays for the property and personal injury damages of someone you hit if a collision is your fault. In Texas the minimum amount of liability insurance that you are required to carry to cover for bodily injuries you may cause is $20,000.00 per person and $40,000.00 per incident. You are also required to carry $15,000.00 worth of insurance to cover any property damage you may cause.

So let me ask you this, have you seen a typical hospital bill lately? Have you seen some of the fancy cars people drive in this city? If those minimum limits sound a bit low, its because they are. In a time when any stay in a hospital is likely to cost tens of thousands of dollars and a new Toyota (not a Lexus mind you, but a Toyota) can cost upward of $25,000.00, you should seriously think about asking your insurance agent for more than these minimum limits. I think you will find the cost of increasing your coverage to $100,000.00 per person and $300,000.00 per incident surprisingly small. Your coverage for property damage will increase as well. Of course, as an alternative, you could just make sure you always drive behind vehicles that are at least ten years old!

Another type of coverage is called Personal Injury Protection, or PIP. This coverage will pay for your medical expenses and up to 80% of your lost wages in the event you are in an accident. Usually, the minimum amount of PIP coverage is $2,500.00, but again, it does not cost much to increase these policy limits. Again, given skyrocketing medical expenses and the importance of keeping up your flow of income, I suggest PIP coverage in at least the amount of $5,000.00.

In my opinion, the most important type of “optional” coverage anyone can purchase is Uninsured Motorists (“UIM”) coverage. This coverage will “step into the shoes” of someone who causes an accident if they are at fault and do not have any insurance. In my practice, you would be amazed at the number of times I see people involved in accidents who do not have insurance. Not only is this illegal, but it is irresponsible as well. UIM insurance has another benefit as well. It also acts to protect you in the event you are struck by someone who is underinsured. For example, lets say you are struck in a collision and sustain serious personal injuries. Furthermore, lets say the person who caused the collision only has minimum policy limits. In this scenario, your UIM coverage will “fill in the blanks” and will act to increase the liability limits of the “underinsured” driver beyond $20,000.00.

Of course, you may also wish to purchase comprehensive and collision insurance as well. This insurance will pay for the repair of your vehicle if you cause an accident, or if your car is stolen, etc. If you are financing your vehicle, your bank will require this coverage. You may have an option of the size of your deductible. How much risk you can afford to take in this regard is a question of personal preference.

There are also other types of optional coverages that your insurance company may offer. These may include car rental insurance, glass breakage, or death indemnity. While some of these coverages are quite inexpensive, others may not be worth the expense. I would certainly make sure you had the “basics” (liability, PIP and UIM) in place before you started thinking about these “bells and whistles.”

So remember folks, even if you are trying to watch your budget, be careful about cutting back too far on your insurance bill. Insurance is one of those things that you hope you never need, but you are darn happy you have it when you need it!

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