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
If you cause a car accident, you might be liable for much more than property damages. Here in Minnesota, there is a common misconception that living in a ‘no-fault’ state means that no fault will be determined in an accident. The truth is drivers are always accountable for the damages they cause, and you could become financially responsible if you are sued after an accident.
Bodily injury liability lawsuits often total hundreds of thousands of dollars for things like medical bills, lost wages, emotional distress, and more. In some cases, you could also become liable for punitive damages – particularly if you were exhibiting negligence by texting or driving under the influence of alcohol at the time of the accident.
The state mandates that all drivers carry at least the minimum required bodily injury coverage, but that may not be enough to shield your personal income and assets in the event of an accident. Ultimately, you are personally responsible for any damages you cause – even if you do not have enough insurance to cover the entire liability. Here at Pentagon Insurance, we recommend that all of our Twin Cities area customers purchase enough liability coverage to minimize their financial vulnerability in an accident.
Split Limits vs. Combined Single Limit (CSL)
Drivers can choose from a wide range of bodily injury liability limits, which are usually offered as either combined single limits (CSL) or split limits. A CSL is expressed as a single number on your policy and indicates the amount in thousands the insurer will cover for total bodily injury liability in an accident. A 300 CSL, for example, provides for a maximum of $300,000 in coverage.
If your coverage comes with split limits, your policy will have two different numbers. The first indicates the amount in thousands available per individual victim, and the second is the total amount in thousands available for all victims combined after an accident. A 250/500 split limit, for example, would provide up to $250,000 per individual and up to $500,000 total available bodily injury liability coverage per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Here at Pentagon Insurance, we want nothing more than the safety and protection of you and your passengers. Perhaps the most important part of your policy is the coverage that pays for your injuries in the event of an accident. As a ‘no-fault state,’ Minnesota requires all drivers to carry Personal Injury Protection (PIP). This important insurance is the primary coverage for your injuries regardless of who is at fault for an accident.
Drivers should also purchase uninsured motorist (UI) and underinsured motorist (UIM) coverage for help covering the cost of injuries and other expenses not covered by PIP or an at-fault driver’s bodily injury liability. Whether a driver hits you with no insurance or injured by a driver with too little coverage to meet your needs, you can rely on UI and UIM coverage to fill in the gaps.
Money to Help with the Little Things
Small expenses can add to major costs after an accident. From towing charges to rental car fees, there are coverage ‘extras’ you can add to your policy to help minimize your financial burden after a collision. Talk to an agent at our office to learn about the additional coverage that could spare you thousands in added costs.
Beyond Car Insurance
It is important to choose the right types of coverage and high enough limits for your car insurance, but sometimes even the most comprehensive policies are not enough to meet your liability needs after an accident. If you injure and disable a young physician, for example, you might be responsible for millions of dollars in future lost wages, as well as ongoing medical expenses. A $250,000 individual liability limit will not come close covering the loss, leaving you with a personal responsibility to cover the debt. Instead of losing your assets and facing a lifetime of wage garnishment, you could protect yourself with an umbrella insurance policy instead.
Umbrella insurance extends your liability protection by providing supplementation to your primary coverage. Most policies provide $1 million or more in coverage, which pays benefits once you reach the limits on your primary policy. Given its affordable price and financial significance, we recommend all Minnesota drivers consider this important coverage.
Peter Cole, an insurance agent and partner at Pentagon Insurance Agency in Elk River, MN, began his career in the industry more than 30 years ago. He prides himself on backing up every sale by personally providing service to his clients and by providing the coverage they need at the best possible price.
Contact Peter to discuss your situation today!