Online Safety Community

Liability, Property Injury, Property Damage and NoDown Payment Car Insurance

Depending on what type of financial responsibility laws there are in your state, you will usually be required to purchase either liability or no-fault. In a majority of states, there is a minimal amount of insurance you are required to carry. In a few states, auto insurance in not required, Virginia, New Hampshire, and Mississippi, although you typically have to show proof of financial responsibility – a fancy term which means you certify that you can self-insure yourself should you cause an accident.

There are three types of Liability coverage – Bodily Injury (BI), Property Damage (PD), and Uninsured Underinsured Motorist (UM/UIM).  In most states, either No-Fault or BI and PD are required. UM and UIM are usually not required, but you will need to sign a waiver/exclusion clearly denying your desire to purchase these coverages.

Bodily Injury (BI)

What is covered? This coverage does not provide protection for you or your car. Instead, if you cause an accident in which people are injured, BI will pay for their medical expenses, lost wages, and pain and suffering. Also covered are the injuries incurred by a passenger(s) who is not a family member. Finally, if your car is being driven by a household family member or person with permission to use the vehicle, and they cause an accident, any injured person in the other car is covered.

Coverage Amount: BI is usually a required coverage and protects you in case you are sued.  If you did not carry this coverage or did not have enough coverage, the injured party could personally sue you and come after your assets. So how much coverage should you buy? BI is usually sold with limits that have two-dollar amounts (split limits) – e.g., $25,000/50,000. The first amount ($25,000) is the maximum amount the insurance company will pay per injured person for hospital/doctor bills, lost wage, and pain and suffering. The second amount ($50,000) is the maximum amount paid to all parties involved in an accident. So, if an accident you caused injured 3 people, then the maximum any one person would be paid is $25,000. All three injured people combined would split the $50,000.

Insider Tip: How much coverage should you buy? This decision is dependent on your personal situation. Here are some general guidelines. The level of BI limits you should choose should depend on your financial situation and the amount of assets you own. This will determine your exposure – basically, how much you can be sued for should you injure someone.

Minimum Limits – Each state that requires BI to be purchased has set minimum limits. This ranges from 10,000/20,000 to 50,000/100,000. This minimum level of BI coverage should only be purchased by people who do not own a home, have very few assets, and/or are new to the market. This level of coverage does not go far to cover a person injured in an accident. If you have assets, and severely injure someone in an accident, your assets (your home, bank accounts) could be in jeopardy if you were sued. Unless you are just trying to stay legal and have little of value to put in jeopardy, you should purchase higher limits.

Mid-Limits – I would classify limits of $50,000/$100,000 in this category. If you make a modest salary, own a small home, townhouse or condo, and are relatively new to the insurance market, the mid-limit policy might work for you. It will provide more coverage than the statutorily required minimum limit, hence some additional protection. However, a severe accident would quickly eat through these limits and could expose your assets. If this is all you can afford, you do what you have to do, but I suggest that you get instant auto insurance no down payment. Typically, it is not a big jump in premium for the additional protection provided by a higher limit policy.

Higher Limits – Limits of $100,000/300,000 or $250,000/$500,000 are considered high limits policies. Also, $300,000 CSL or $500,000 CSL (Combined Single Limit – meaning this is the maximum payout regardless of the number of people injured or cars damaged in the accident) are sometimes available. In selecting one of these limits, you should consider your financial situation and plan accordingly. I would suggest quoting the different limits, because there may not be a big difference in premium for the additional coverage provided. If your financial situation requires additional protection, or if you want additional peace of mind, you should look at purchasing a personal umbrella policy. I will discuss this later in a separate chapter, but for a couple hundred dollars, you can get an additional $1 million in coverage.

The following is information you should consider when deciding on what limit to purchase: the cost of health care, wage loss, and pain & suffering.

The average hospital stay can cost $10,000 to $15,000. The average hospital stays for a trauma incident (serious injury) can cost in excess of $20,000.

The average salary in the US is about $31,700, or $2,642 per month.

Pain & Suffering awards can be anywhere between 1 to 2 times the medical and wage loss expenses. So, if the accident is severe, you can expect the cost to be double or triple the “real” costs.

Obviously, it does not take much to eat-up the minimum limits of BI when an accident occurs. Therefore, if you have assets you want to protect, higher limits can afford greater levels of protection.

Property Damage (PD)

What is covered? If you or a household family member causes an accident, this coverage will pay for damage to the property you damage. For instance, if you hit another car or a mailbox, this coverage will pay to repair the damage. This coverage will not pay for damage to your car.

Coverage Amount: There is a single limit purchased for this coverage. Say $10,000.  If you have purchased $10,000 coverage, all the item(s) you hit will be repaired up to a total of $10,000. If the damage is higher than your limit, then you may be required to compensate the owner for the additional damage.

Insider Tip: Use the same general guidelines discussed above in Bodily Injury when deciding what limit to buy. There is usually a minimum legally required limit. You can pay additional for higher limits. I would describe the Min, Mid, and High limits in these buckets:

Minimum Limits – Any amount less than $25,000.

Mid-Limits - $25,000 to $50,000

High Limits – Any amount greater than $50,000.

Bodily Injury and Property Damage are usually bundled when described and sold. Also, the zero’s representing thousands are dropped. So, you would see BI and PD represented as 10/20/10, 25/50/25, or 100/300/100. The BI limits are the first two numbers, and the PD limit is the third number.

No down payment for who?

Finally, if you opt for no down payment auto insurance, you might face a difficult situation with your insurance. 0 down auto insurance is just for those who are on a tight budget. That means you won’t have too much of a chance to get well covered in a case of an accident where you are at fault. But in any case, you can always take that offer when it comes to cutting costs on your car insurance.

Views: 42

Comment

You need to be a member of Online Safety Community to add comments!

Join Online Safety Community

Take our poll!

Take our poll!

Forum

Green Smart Technical 800+ Turnkey Projects in UAE – Rope Access Company in Dubai

Green smart is an ISO 9001: 2015 QMS, OHSAS 18001: 2017 OHSMS, ISO 14001: …Continue

Tags: window, cleaning, services, facade, companies

Started by Manikandan yesterday.

Workplace safety for workers other than your own 2 Replies

Do your workplace/traffic safety plans include safety measures for workers who are not your own employees? Do they take into account the safety of those who will be - or could be - at your workplace,…Continue

Tags: emt, paramedics, emergency, occupational, health

Started by John Petropoulos Memorial Fund. Last reply by Tara safe Mar 1.

What % of Dollars should be bugeted for All Safety Training for a "Heavy Equipment Road Construction" company with 100 employees? 1 Reply

I have been at a Highway and Road Construction company for six months. I am developing a (first) complete training program. I am the 1st full time safety hire for this company. I need to develop a…Continue

Started by JTurpening. Last reply by Jen McDade Feb 19.

Technology and Safety 1 Reply

What are the most useful tools to have at your fingertips? -Toolbox Talks-JSA-JHA-Daily Reports, etc. What is falling through the cracks that could be an easy fix? Safety Managers, Coordinators and…Continue

Tags: safety

Started by Drew stone. Last reply by Jen McDade Feb 15.

Important of Warning sign 1 Reply

Warning sign is a type of traffic sign that guide a hazard ahead on the road. Having proper warning sign on the road provide a healthy environment.Continue

Tags: Signs, Workplace, Safety, Sign, Warning

Started by healthandsafetysigns. Last reply by Jen McDade Jan 14.

Badge

Loading…

© 2019   Created by Safety Community.   Powered by

Badges  |  Report an Issue  |  Terms of Service