Many times when quoting a new client with car insurance, we are told to quote “just the minimum” or “street legal.” With many TV and radio commercials preaching the state minimum and saving money, people buy into that illusion that having the cheapest insurance is the best option for them. What they do not realize, in case of an at-fault accident, they may not have enough insurance coverage to keep them out of court.
Break It Down
Perhaps you have heard the lingo “25-50-25” but do you really understand what that means? Yes, it is the state minimum limits of auto insurance liability for South Carolina, South Dakota, Rhode Island, Oklahoma, Ohio, North Dakota, New Hampshire, Nebraska, Missouri, Mississippi, Kentucky, Indiana, Kansas, Georgia, Arkansas, and Alabama. It is up to each state to determine what their requirements of financial responsibility for each operator will be – and sometimes, they can decide to change the minimum requirement. In 2006, South Carolina made the decision to increase their minimum limits from $15,000/$30,000/$10,000 to the current $25,000/$50,000/$25,000—this increase in premium only affected those drivers who had purchased the state minimum limits prior to this change.
Liability Insurance
Bodily Injury
The first set number is 25, which really means $25,000 bodily injury per person. This is the most your insurance company will pay for a single person. This protection covers others you injure due to an at-fault accident you cause or someone you have granted permission to drive your car has caused. (Yes, the insurance follows the car, not the driver.)
Bodily Injury, also known as “B-I,” covers the injuries to other people – other drivers involved in the accident, their passengers, pedestrians and the passengers in your car. This includes medical expenses and treatment related to the accident and those that would be usual, reasonable and customary.
Examples of medical treatment from a car accident could be:
- EMS transport, emergency room treatment, X-rays, hospital stays, chiropractic care, disability care, pregnancy treatments (if anyone pregnant at the time of the accident), follow-up visits and equipment costs.
- Legal Fees
- Loss of Income
- Pain and Suffering
- Funeral Costs, in case of death
The second set number is 50, which really means $50,000 total bodily injury per accident. This amount is the cap. Another words, this is the most your insurance company will pay on your behalf for injuries and treatment to others in the entire accident.
The limit of $50,000 could/can get sticky if there are multiple vehicles involved, multiple injuries to others or more than one passenger in the other vehicle(s).
Consider these medical costs:
- Ground EMS/Ambulance transport to hospital - $450
- Air Ambulance transport to hospital - $21,700
- Emergency room visit - $1,500
- X-rays, Bloodwork, CT Scans - $140-$3,000
- Surgery – Potentially $$$,$$$
- Medication - $500
- Specialist - $250+
- Follow-up appointments - $$$
- Basic Funeral Costs $6,700
You do the math – any way you add it up, $50,000 is simply not enough insurance protection to gamble your assets, future and current earnings away.
Even if you believe you don’t have anything anyone would want, your wages can be garnished and you can be sued for the shortage of insurance.
Property Damage
The third set of numbers is 25, or as you may have caught on by now, the maximum your insurance company will pay for the total property damage of the accident is $25,000. This means if you hit one or multiple cars, your policy will only pay $25,000. If you hit a wall, telephone pole, sign or even a house, your policy will only pay $25,000.
Consider these costs:
- In January 2021, the average new car costs $40,857.
- To replace a telephone pole costs up to $3,000.
Four out of three people may struggle with math, but do you see the dilemma? No matter how you add it up, you will not be able to squeeze $40,000 out of $25,000.
Why Risk It?
Saving a dollar can be a good thing, but is it worth it in the long run? It can be difficult to have the conversation—to try and educate why insurance agents recommend higher liability limits than the state minimum. We have seen why it is not always a good thing.
It is not because we want more of your money – we want to make sure you purchase a policy that will protect you like you think it will. Like you want it to. Most insurance companies offer higher liability limits and it usually is not as costly as you may believe it to be.
What’s The Next Step?
Call Consultative Insurance Group for a free consultation or get a no-obligation quote by completing a few questions, or contact your agent today and ask for a quote on the next three levels up from your current liability limits.
Educate yourself on the liability protection limits (what they really mean) and the price.
While price is not everything, and it may not be within your budget to make that change now – but at least have the conversation. You don’t know what you don’t know, and it’s time to take that first step.
We Are Here To Help
Our job as your insurance agent is to listen to your life wants, needs and budget and pair you through our consultative insurance buying experience with an insurance company who can protect you like you deserve. We would love to be your agent of choice. Contact our team today!