How Much Is Enough?
If you were catastrophically injured or killed in a motor vehicle accident tomorrow, how much money would it take to replace your economic value to your family? How much uninsured and underinsured motorist coverage do you have? How much would it cost to protect your family?
These are questions that very few people ask themselves. However, every day, people are catastrophically injured or killed in motor vehicle accidents and all too often there is little to no insurance to cover their losses. This is a tragedy. Just as tragic is the fact that it’s completely preventable and surprisingly inexpensive to do so.
Few people realize that having car insurance is NOT a requirement in Virginia. In Virginia, you can register and operate an “uninsured motor vehicle” by simply paying a $500 fee. And even if someone has car insurance, the law only requires that their policy include $25,000 in coverage “because of bodily injury to or death of one person.”
So, how do you protect yourself and your family when the other driver may be uninsured or may have minimal limits? The answer is what’s called uninsured (“UM”) and underinsured (“UIM”) coverage. UM/UIM coverage protects a driver when he or she is injured or killed by someone who has no insurance or who has inadequate insurance to coverage the damage caused. Almost without exception, every policy in Virginia has UM/UIM coverage with limits matching the policy’s liability coverage.
UM/UIM allows a driver to protect himself or herself, without relying on the “other driver” to have adequate insurance. And, why would we depend on a stranger to carry adequate insurance anyway? In a state where drivers can carry little to no insurance, why not purchase adequate UM/UIM coverage to protect yourself?
This becomes a no-brainer when you realize how the cost of insurance works. Insurance policies are sold in layers. You can buy $25,000 in coverage (first layer) or $50,000 in coverage (second layer), or $100,000 in coverage (third layer) and on up. What most people don’t know is that the costs for each additional layer is dramatically cheaper than the one below. Put another way, the first $25,000 is the most expensive layer, and they get cheaper each step up.
Let’s put some real numbers on this discussion. Below are sample quotes recently obtained from a well-known insurance broker. These quotes are for a generic family of 4 drivers with 4 vehicles and no other unique factors. Obviously, the actual costs for you and your family may vary greatly.
$25,000 in coverage costs $2,065/year
$50,000 in coverage costs $2,232/year
$100,000 in coverage costs $2,362.00/year
$250,000 in coverage costs $2,699.00/year
Under this scenario, if you carry a minimum $25,000 policy, you can increase your protection 10 fold while only increasing your premium by 30%. If you’re like many people and you carry $100,000 in coverage, you can increase your protection 250% for only about 15% more.
As obvious as this may seem, very few people understand their insurance policies, their UM/UIM coverage, and the costs of proper coverage. Sadly, all too often, people learn these lessons after they or a loved one are injured or killed and their lawyer gives them the bad news that there is inadequate coverage to compensate them for their loss.
Now, let’s revisit the beginning of this article. If you are catastrophically injured or killed in a motor vehicle accident tomorrow, how much money will it take to replace your economic value to your family? How much uninsured and underinsured motorist coverage do you have? How much would it cost to protect your family?