Let Me Bore You for Two Minutes About Insurance
Dec. 9, 2020
I would have a lot of money if I had a dollar for every time that I talked with a client who told me they had “full coverage” for their auto insurance policy. Many people don't know what they actually have until they are in an accident, and then it's too late. There really is no such thing as “full coverage”- what types of coverage you need and the amount of coverage is going to vary from person to person based on your situation.
Most of the types of coverages people have on their auto insurance policies are optional. You are not required to have coverage to protect your windshield. Nor are you required to have “comprehensive” to pay you if your car is stolen or “collision” if your car is damaged and needs repairs. Most people are going to want to have them, but it is not required by the government.
Two types of coverage that are required are “liability” and “uninsured motorists”. “Liability” is a type of mandatory coverage that will pay out to someone that is hurt if you cause a car accident. Connecticut requires at least $25,000 in “liability” coverage. Another required type of coverage is “uninsured motorist” (this is sometimes called “UM” or “UIM” insurance). This is coverage that will pay you money if the person that causes the accident has no auto insurance or not enough auto insurance. You must have at least $25,000 of UM coverage as well.
The issue with auto insurance often is HOW MUCH coverage to get. For “liability” and “UM” you are required to get at least $25,000, but is this enough? When deciding how much coverage to get you should ask yourself “if I caused an accident and hurt somebody, and they sued me, what could they get from me?” You should consider whether you own a house, how much your job pays you, and what money you have in the bank. The more auto insurance coverage you get, the more it is going to cost you each month when you make your auto insurance payment. If you have a minimum wage job and don't own a house, maybe you don't need a million-dollar policy.
The other side to think about when deciding how much coverage to get, is if you are in an accident, is the minimum policy of $25,000 going to be enough? $25,000 of coverage is a minimum policy and if you're in an accident and spend a few months seeing an orthopedic doctor and have an orthopedic injury, $25,000 is not very helpful, and usually not enough. Finally, the coverage limits are not simply $25,000 or $1,000,000 – you can get something in between like $100,000 or $250,000 which might make the monthly premium payment easier AND give you the protection that you want.