This post is part two of the blog post that answers the question “How much car insurance is enough?”
Compensation for Harm You Cause Others
No one wants to injure another person, but if you are at fault for a collision, that is what could happen. Approximately 2.5 million people go to hospitals every year for accident-related injuries. Here in Wisconsin, at fault drivers are responsible for injury-related expenses, such as medical bills, lost wages, and more. In some cases, there are also punitive damages to pay – particularly for drivers who were being negligent in causing the collision.
Bodily injury liability insurance is mandatory in Wisconsin, but the minimum limits are too low to cover liability for a large claim. This type of insurance will cover your liability, but only up to the limits of your policy. If your limits are too low, you could be responsible for paying the damages out of your savings, income, or liquidation of assets.
Split Limits vs. Combined Single Limit (CSL)
You will select your bodily injury liability limits when you purchase your policy. Insurers may offer coverage as a combined single limit (CSL) or a split limit. A combined single limit does not restrict the available coverage per person – only per accident. That means a 300 CSL would provide up to $300,000 total bodily injury liability coverage for all victims combined in an accident. A split limit provides maximum coverage per accident and also caps available coverage per individual. It appears on your policy as two separate numbers. A 250/500 split, for example, covers up to $250,000 per individual victim and up to $500,000 total bodily injury liability per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Although all drivers must have bodily injury liability coverage, many go without insurance altogether. Not only are they breaking the law, but they are also putting you and your passengers at risk. If an uninsured driver injures you, uninsured motorist protection (UI) can help cover your losses. You can also add underinsured motorist protection (UIM) to your policy, which helps cover damages that exceed the limits on an at-fault driver’s policy.
Money to Help with the Little Things
How much money would you want to pay out-of-pocket after a car accident? Even with coverage for physical damages, injuries, and liability, there are still other ‘small’ expenses to pay. Perhaps your car will need to be towed to the nearest body shop. Maybe you will need a rental car while your vehicle is repaired. There could also be co-pays and health insurance deductibles for immediate medical care. Instead of fretting over the little things, consider personalizing your insurance policy with coverage that minimizes your financial burden after a collision.
Beyond Car Insurance
Liability is often the most expensive component of a car accident – particularly if you are at fault for a traumatic injury, multiple injuries, or a fatality. Damages can quickly exceed even the highest bodily injury liability limits, resulting in million-dollar lawsuits that threaten your financial future. For that reason, drivers should consider purchasing an umbrella policy, which offers supplemental liability protection at an affordable price. If you cause an accident, your primary car insurance coverage will pay for damages up to the limits of your policy. Then, your umbrella policy will provide a continuation of payment, extending your liability coverage by an additional $1 million or more.
For more information about supplemental liability insurance or any of the other coverage types mentioned in this post, contact the team here at Homewood Insurance today.
