Your car insurance protects you against several things. There is physical damage coverage (comprehensive and collision), which protect your vehicle from damage. There is Personal Injury Protection (PIP), Optional Basic Economic Loss (OBEL), Supplementary Uninsured/Under-Insured Motorist (SUM), and Medical Payments to protect your passengers and yourself from injuries and potential loss of income from injuries. Finally there is your Bodily Injury and Property Damage Liability coverage, these protect you in the event you cause an accident which causes bodily injury and/or property damage to someone else.
Split Limits vs. Combined Single Limit
In New York State there are companies which write both split limits and combined single limits of coverage. Some carriers (Geico, Allstate, State Farm) only write split limits of liability. In order to make insurance as confusing as possible, they take your liability coverage and split it up between bodily injury and property damage. They don’t stop there, though. As if that weren’t messy enough, they take the bodily injury liability and split it up one more time into different limits per person and per accident. With a combined single limit of liability, there is one amount per accident which can be used for bodily injury and/or property damage.
New York’s State Minimum Limits
As it stands today, the state minimum amount of liability coverage in New York is $25,000 of bodily injury per person, $50,000 per accident. The state minimum amount of property damage liability is $10,000 (Fun fact: Pennsylvania has the lowest at $5,000). So if you had the state minimum amount of liability coverage and caused an accident, that’s how far your insurance would get you before the other party went after you personally. Even though I’ve personally never seen one, the state minimum amount of a combined single limit liability policy is $60,000. Again that $60,000 can be used for either bodily injury or property damage to others.
Liability= Asset Protection and Peace of Mind
In every property & casualty insurance policy you own, the liability coverage is there for you as much as it’s there to protect others. How often do you see the personal injury attorney commercials bragging about multi-million dollar settlements? While it’s hard to imagine it ever happening to YOU, it does happen, and it happens more often than anyone wants it to. Your insurance policy(s) protect you from those lawsuits. It protects your home, your income, and your future earnings. Let’s back off the worst case scenario for a second and touch on a more probable scenario. How many people do you know that have been in a car accident with another vehicle? Have you personally?
Is your insurance protecting YOU or just your car?
Let’s play a game where we pretend you just caused an accident. You’re a little late to work and just beat that red light. Or did you? The truck going the other way also happens to be running late and went right as it turned green. You crash right into his passenger side, cause all sorts of body damage, and actually do damage to the frame too. Thankfully, everyone is OK. Now it’s up to the insurance companies to settle it, right? Wrong… You chose to save a few dollars a month and opted for only $10,000 of property damage liability. That truck is worth a lot more than $10,000 and do you know who’s responsible for making up the difference? You are!”
“Quote Your Own Insurance” Follies
There are companies who encourage you to quote your own insurance. They sell on price, price, and price. If they reel you in on price, what’s stopping you from getting it as low as it can go? Here’s the thing, though, if you get less coverage, they’re on the hook for less as well. Did you completely understand what you were signing up for? It raises the question, what is the point of having insurance if it can’t even protect you the way it’s designed to? You will be surprised how little it costs to increase your liability coverage. At the end of the day, as the customer, it is your decision on the coverage you want. My only goal is to inform you of things you may have not known before.
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