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It can't be emphasized enough the importance of maintaining adequate automobile liability limits.  First lets explain what they mean using MO State Minimum Limits as an example:

  • $25,000 Bodily Injury Per Person: This is the maximum the Carrier will pay for Bodily Injury Claims to a 3rd party if you are determined to be at fault
  • $50,000 Bodily Injury Per Accident: The maximum the Insurance company will pay for any one accident (regardless of the number of people in the claimant's vehicle).

  • $10,000 Property Damage: The maximum the Insurance Company will pay for Property Damage

These limits are commonly referred to as $25/$50/$10

They're called accidents for a reason, nobody wants to have one, but they do happen.  There are more distractions than ever when driving - cell phones going off, text sounds, GPA's, not to mention having to pay even greater attention to other distracted drivers.  If it does happen, you want to have good protection for yourself and your family.

Let's look at an example: Ernest is driving home in the rain, and hits sizable accumulation of water near the median.  This causes him to lose control of his vehicle striking Ida in the next lane.  Unfortunately, Ida is severely injured.   She is a professional with a good income and a Mom. 

Ernest is responsible in that he maintains limits higher than the State minimum, in this case  $100/$300/$100.

However, as we understand of medical costs today, Ida's medical and rehab bills are staggering (approaching nearly $45,000).  So Ernest is good there (with a $100,000 Bodily Injury Limit).  But, Ida is now regularly in a lot of pain.  Because of this, she is often too fatigued to do the things she used to enjoy - watch her daughter's softball  games, take bike rides with or even go to the movies with her family.  Not to mention the loss of income due to the extensive time off work.  Think about your own situation, if some fuck decides he can text and drive at the same time and hits your vehicle, and now you can't provide for yourself or your family the way you had previously, are you going to tell your lawyer to go easy?  Hell no!  He needs to be punished in a big way and the courts will likely do it!

After hearing all the details, the courts award Ida a total settlement of $225,000 for Bodily Injury and $15,000 for her totaled Honda Accord.   Ernest's Insurance Company will cover:

  • $100,000 of the bodily injury - leaving a deficit of $125,000  

  • the full amount for Ida's vehicle (since he had $100,000 Property Damage Limit)

  • Ernest will have to come up with the $125,000 himself

     

Ernest is fairly liquid, but this settlement totally depletes both his retirement and his kids' college education fund!  Most families are not this liquid. Had Ernest not been, he and his family likely lose their Home.  

Ernest is not a bad guy, he thought he had adequate limits, and he's not the type of person who say's "I don't care about liability limits, they're not going to get anything from me anyway, because I don't have anything!"  The simple response to this is "Wage Garnishment asshole!  Now your guaranteed you won't have anything!"

Here's the big shocker, the cost to significantly increase your limits is not that much for most individuals.  Just this week we had 2 families come to us with limits of $100,000/$300,000/$100,000.  As a matter of practice, we recommended limits of $250,000/$500,000/$250,000.  Here was the annual premium increase: 

  • Family number one had 2 vehicles - annual increase was: $67 (not per vehicle - Total!)
  • Family Number two had 3 vehicles - annual increase of: $53

That is a huge increase in limits for a fairly insignificant amount of premium.  Being very intelligent (as all of our valued clients are) they both opted for the increase to protect themselves and their family. 

If Ernest had had these limits, his retirement and kids college education savings are still fully funded! - and the additional premium would've likely been less than $75 per year (about $6 per month).  

I got way long-winded on this one!  But, I believe it is good knowledge to pass along and hopefully it is useful for someone. If so, please use the Facebook or Linkedin Share button below. 

If you would like to review a proposal for your own Auto Insurance, please feel free to call 636-519-0059, email me: dan@hebbeln-ins.com  or simply click the button below: 




 

Posted 7:23 AM  View Comments

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Hebbeln Insurance
744 Spirit of St Louis Blvd, Suite H
Chesterfield, MO 63005
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