Are you underinsured?

By November 1, 2018Auto Insurance
Q: Would you say most people are over-insured or underinsured when it comes to auto insurance?

Bradley Hensley: Definitely underinsured, and it all comes down to your liability coverage. If you cause an accident, your liability coverage helps pay for the other person’s expenses. Your $50,000/$100,000 plan limit may sound sufficient, but if you hit a millionaire or even a car where multiple people suffer bodily injury, that insurance money could be gone before you’re done paying. And the rest will have to come out of your own pocket.

EXAMPLE: With a 50K/100K plan, each of the injured people can receive up to $50,000 and the TOTAL your insurance will pay for all injuries is $100,000. Suppose you cause an accident where 4 people are injured in the other vehicle and each of them needs $30,000 in medical care. That’s $120,000 in total and yet your insurance will only cover $100,000. You will personally be responsible for paying $20,000.


Q: So why do so many people not have the amount of liability insurance they need?

BH: Often people are taking the option that’s the state requirement, assuming that will be all they need. In Kansas you are only required to have $25,000/$50,000. But remember, that is only the minimum amount required, and in the above scenario that would mean you would have to come up with $70,000 of your own money! Having just the minimum liability insurance and getting into a bad wreck could put you at risk for major financial ruin.


Q:  How much liability insurance would you recommend?

BH: While different options may be right for different people, for 95% of people I recommend getting a 250K/500K liability plan. This may feel excessive but take a moment to watch TV for a few minutes. You are bound to see TV ads for lawyers trying to convince you to sue after a car accident. Legal fees are very expensive, and you may find yourself on the other side of an aggressive lawyer who wants more than your what your insurance company policy will pay.


Q:  Are there other ways people might be underinsured or even over-insured?

BH: Yes. From comprehensive insurance to collision insurance, it’s important to know what your situation is – who’s driving your vehicle, if it’s being used for work, etc – to make sure you’re covered properly. I am happy to sit down and discuss anyone’s situation to provide the options that are the best for them and their family. Contact me anytime with your auto insurance questions.