Insurance Tidbits:

Doubling Coverage Without Doubling Your Premium

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Saying people don’t like paying for auto insurance is probably an understatement.  However, with a little knowledge, you can help ensure that your premiums will provide you with the best coverage.  Major areas of your policy include:  Liability, Uninsured Motorist, Comprehensive and Collision.

Liability pays for the injuries or property damage you cause to another person resulting from an accident that was your fault.  Uninsured Motorist pays for losses to you and your passengers if you are injured by someone without insurance (and in some cases) without enough insurance to adequately cover the losses you sustain.   Comprehensive and Collision pay for the damages to your automobile from a covered loss, subject to a deductible   The deductible is how much of the loss you will pay first, before the insurance company begins to pay. 

In a perfect world, everyone would carry more coverage.   However, due to budgetary restraints, choices are made.   Your coverage choices should be based on your potential exposure to loss.  For example, which loss below would have the greatest financial impact on you?

• Causing an accident that seriously injured someone

• Being seriously injured in an accident caused by someone else

• $500 to have your car repaired after an accident

Most people would consider the injuries to have the greatest impact.  Yet, when buying insurance, people tend select lower deductibles (more Comprehensive and Collision coverage) and carry low Liability limits or Uninsured Motorist to compensate.  As a practical matter, if you caused an accident where there were serious injuries, low liability limits may not be sufficient.  Once the policy limits have been paid, you would personally be responsible for any remaining liability.  Your assets and future incomes may be exposed until your responsibility had been fulfilled. 

The real secret is that additional Liability or Uninsured Motorist coverage does not cost much.   In many situations, doubling your coverages may cost less than a few dollars per month.  To help offset the additional premium, you may consider increasing your Comprehensive and Collision deductibles. 

Ultimately, you should work with an insurance professional who will assess your needs and determine the proper level of coverage.

Jon Gardner, CPCU is an Insurance and Financial Services Agent with Farmers Insurance who offers complementary insurance evaluations.  His office is located at 27907 Smyth Dr, Suite #101. in Valencia.  He can be reached at (661) 775-9244