How Much Auto Insurance Coverage Should Drivers Carry?

How Much Auto Insurance Coverage Should Drivers Carry

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For auto insurance, policy holders are only covered up to the financial limits that they purchase. Traditionally, clients are advised to review their assets when choosing coverage limits. If a driver is involved in an accident, they are only covered to the amount listed on the policy. They will, therefore, be personally liable for any damages exceeding this amount.

For example, if a policy lists a limit amount of $15,000 per person, for bodily injury, and a driver is involved in an at fault accident with damages in the amount of $25,000 the personal liability would be the difference. The amount that they would have to pay for damages out of their pocket would be $10,000. In this situation, if the coverage limits on the policy where at $25,000 the insurance company would pay all of the damages for the consumer.

Although it is recommended to carry higher limits of protection on auto insurance policies, the higher limits of coverage will come with an added premium. It is understandable that the insurance company will charge a higher premium based upon the amount of exposure that they have.

With the economy at a low point, many consumers are finding themselves in a position that they need to triage their expenses. At the same time, the amount of drivers that are driving without insurance has been increasing. This is likely a result of being in a financial position that they are not able to afford their current policy premiums.

Having an auto accident while not having an active insurance policy could be detrimental to a driver's financial future. Driving without insurance places any assets that they own in jeopardy. Although carrying high limits of protection on auto insurance policies is recommended, a policy that meets the budget of the policy holder may be the best option if they are in a position that you can only afford the minimum amount of coverage. They would be far better off being involved in an accident with the minimum coverage that with no coverage at all.

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