As many times as I brace myself for this inevitable response i still cringe every time I hear a client refer to his or her auto insurance limits as being "I have full coverage." What does "full coverage" really mean? I guess the more important question is what do YOU think "full coverage" means?
Let me be clear, and please excuse my all caps in advance....THERE IS NO SUCH THING AS "FULL COVERAGE"!
Most people believe that his or her insurance policy will cover them against any and all losses regardless of the amount of damages. I am not sure where this premise came from, but I am here to say it is a dangerous mindset that will eventually lead to some unpleasant realities if and when you have an accident. There are numerous coverage types you can purchase within your auto insurance policy, and there are even more limits available of each coverage type. The key word here is "limits." Each coverage type has a limit, meaning that this is the max the insurance company will pay out. Remember we buy insurance to transfer the risk to an insurance company in exchange for the money we pay them (premium). Below are some crucial coverage types
within your auto insurance policy:
This is an amount of money the insurance company will pay out on your behalf for injuries you cause due to an at fault accident. State law says you don't have to even carry this coverage. Most of my clients carry $500,000 of bodily injury liability coverage
, however if a loss exceeds $500,000 then the balance would fall on my client personally.
Property Damage Liability:
This is an amount of money the insurance company will pay out to repair or replace the property you damage in an at fault accident (another car, house, fence, lamp post, etc). The state of FL says you must carry at least $10,000 of property damage liability coverage. Most of my clients carry at least $100,000. If one of my clients with this limit however smashed up a Rolls Royce, they would be coming out of pocket to make up the difference.
These are just 2 examples of liability protection and how they do have max limits. The insurance company will never offer "blank check" limits. You must educate yourself and understand your insurance limits so that you are not caught off guard in the event of an accident.
You may be wondering.... how can I protect myself with even more liability coverage than what is offered in my auto insurance policy? If you are asking yourself this question, then I am smiling because you are starting to seriously consider your liability obligations, which is a form of asset protection for you and your family. You will probably be surprised to learn that an additional $1,000,000 of liability protection may cost you only $13 per month. Check out a previous blog on umbrella insurance
to learn more.
If you are not sure what your limits are, or even worse you think you have "full coverage", reach out to an agent at Galt Insurance Group today
to get a free, ten minute review and recommendation.