Do you still buy insurance like you did in High School?

In High School you had no money but you wanted a car.  

If you were lucky your parents may have helped but for some of us we had to get a job, save some money and flipped through a News on Wheels book looking at used cars.

Only problem is before we began our search we never asked how much is insurance.

If you think people no longer do this you are incorrect

I get calls every day “We just bought a car. How much is insurance?”

You should ask how much is insurance on the car you want before you buy but that is another blog post.

So back to High School….Most students picked out an older model vehicle for the lowest price and were able to drive it their senior year of high school.

How did they buy insurance in High School?

“Give me the cheapest insurance to be legal”

This is ok when your savings account hovers around $4 but as you get older and hopefully acquire more assets and more money in your savings account it is time to look at buying insurance in a different way.

 

The Game Plan

The advice of any Insurance advisor or Financial advisor will always be your Liability limits are too low.

The Goal is to have these limits to qualify for a personal umbrella

Car 250,000

Home 300,000

Landlord Investment Property 300,000

Boat 300,000

Motorcycle 250,000

 

Once you qualify for the personal umbrella protection of at least 1,000,000 of additional liability you are now using insurance to protect your assets

The cost of a personal umbrella policy can be as low as $1/day

The largest hurdle I see often is raising your car insurance liability limit up to 250,000

The majority of car insurance policies in Louisiana only have minimum liability limits of 15,000

It is sticker shock to go from 15,000 to 250,000 but what you can do is raise your liability limit up one level each renewal

The cost of raising up just one level is NOT a 100% increase or double what you are paying now

It is often a small increase per month

 

Here are the levels

15,0000/30,000

25,000/50,000

50,000/100,000

100,000/300,000

250,000/500,000

When you go up one level at renewal it could be as low as $20

 

So what is the risk of having minimum limits?

I often hear if my liability limits are low that is all the attorney will get

No

That is all your policy is going to pay

You will now have to pay any additional amount owed out of your own pocket

The one number that you should be scared about is not so much your low liability limit but it is the last number in the liability limits you have

15,000/30,000/25,000

The 25,000 is the most your policy will pay for property damage to another vehicle or vehicles

To put in perspective the average new car price exceeds 25,000

What if you hit more than one car?

What if you hit a car and that car hits multiple cars and maybe a damaged building is involved?

Who is paying the property damage bill?

Your policy cuts a check for $25,000 and you will get a bill for the rest

 

As a former claim rep I can tell you every insurance company has a Subrogation Department

Subrogation is a fancy word for “The insurance company will take care of the damage now but send the bill to the responsible person after everyone is taken care of”

So about 10 months later you would start receiving bills from the other insurance companies requesting you pay for the damages you caused in the accident

They can put you on a payment plan if you need it but you will be responsible for property damage

Remember plaintiff attorneys may only take the liability limits in a settlement because most plaintiff attorneys never want to go to court, they just want quick settlement from insurance companies

But property damage claims with insurance companies are handled differently

They want their money back

As you know insurance companies are a business

They need to make money

They are not in the business of giving money away

If they have to pay out on property damage you caused, they will send you a bill to be reimbursed (subrogation)

So take a look at the last number on your car insurance liability limit and consider a level up each renewal

If would like us to review your current insurance protection, just complete the form and I will reach out to you