How Much Auto Insurance?

Disclaimer: my paycheck comes from an insurance company.

Take a look at the difference in price for an upgrade in insurance. When insurance is bundled (home+auto+something else+2 or 3 or 8 cars) it is usually very little to go from $300,000 to $1,000,000 worth. Like, less than $200 a year. Various ways of doing it too, whether it is just a ton of insurance on everything, or an umbrella policy or something else.

I've heard a lot of people complain about the cost of their insurance. I've never heard anybody say "you know, I really have too much insurance".

There is another reason to have higher coverage that no one else mentioned. It's not always clear who is at fault in an accident, and having less coverage can put you at a disadvantage when the insurance companies and lawyers get involved.

About 10 years ago I was in a serious accident, I could easily have been killed. I was on a two lane rural highway that ran along a levy. On oncoming 18 wheeler crossed the double yellow to drive down the levy to deliver a load of gravel. There was no road, just a bare spot where the trucks had been running over the vegitation, and no signs or other warnings. He never saw me. His truck blocked the entire road, and I knew I couldn't stop in time. I knew if I left the road, I'd roll. I threshold braked to scrub as much speed as I could, then aimed for a wheel on his trailer to avoid going under. I believe that saved my life. I hit the wheel pretty square, and HARD. Gravel trucks don't give much. I got lucky and walked away cut and banged up real good, but no serious injuries. Had I had a passenger, they would have at least lost their legs. The passenger seat went under the dash and folded into the floor.

It never occurred to me that anyone could come to any conclusion other then the truck driver was at fault. Didn't even think about it. Until the CHP accident report came in a week later. Barney Fife concluded that since the truck driver didn't see me, I must not have been there when he turned. He reported it was my fault for "failing to yield." I would have loved to yield given the opportunity. His accident reconstruction broke every law of physics and math. This put the trucking company on the offensive. They sued me for damaging their trailer. At the time, I had $25,000 liability coverage. They exploited that by claiming $40k in damages, and offering my insurance company to settle for $25k, my coverage limit. My insurance company said this was calculated. If my insurance was offered a settlement within my coverage and refused, I could go after them for any additional if they lost in court. They were going to settle, and I had to plead with them not to. I had to do my own investigation, and presented my findings to the insurance. They agreed with me. In the end, they settled for a much smaller amount, because it was cheaper then fighting it. They found me not at fault and did not raise my rates and waived the deductible on my car. By not having more coverage, it put my insurance company on the defensive.

In reply to Boost_Crazy:

Sort of. The police report is a factor used in a liability investigation, but the insurance adjuster assigned to handle your claim makes the final liability decision. So even if the officer finds you at fault, the adjuster doesn't have to go by that. The other carrier (or trucking company, whoever presented the claim) may not have been "exploiting". Repairing a heavy truck/trailer can be very expensive. Then add down time into it, maybe towing/storage and the bill adds up real fast.

The scenario you're describing is called bad faith. In your scenario, the claimant has $40k in damages. You have $25k in coverage. The claimant (or typically their insurance company or attorney) offers your insurance company to settle the claim in full for your policy limits. In exchange, the claimant agrees that they will not pursue you personally for the remaining damages. If your company refuses and rolls the dice trying to defend, then loses and there's a judgement for $40k you can then sue your own company. The basis of that suit would be that your company had the chance to get you off the hook with no personal exposure but they passed that chance up. It's a very complicated situation, and there are a lot of other factors involved and other scenarios that happen, but that's the upshot. Hence why it's good to have adequate coverage. In a situation like that, the first thing the claimant usually will do is check your personal assets to see if it's worth refusing the insurance company's offer and trying to go after you personally. And if they decide to go after you, they will. If you have plenty of coverage, this never becomes an issue.

From an insurance perspective, having a claim well above policy limits is actually often the easiest type of claim. If there's a whiff of liability along with big time damages, it's easy to just offer up limits.

Yes, you can make yourself a target with "high" limit insurance policy but if you have a good job, assets and any fault in the accident, you need the policy. Oh yeah, never try to explain how your driving skills helped you to lessen or attempted to avoid the accident. It will make your actions look more intentional and will be used against you. Just say that you did your best to avoid and smile.

I had an accident years ago where I was in the inside lane and the car in the outer lane decided to cut across. In order to prevent from being forced into the oncoming traffic, I purposefully steered into the car and hit the throttle for a second then braked. Simple use of physics but it wouldnt have played well in an accident report. Luckily the punk smarted off to the cop who was writing the report and lost the battle right there.

I have 100/300k liability coverage. Have had it there for years. Even had one insurance agent question me on, "Why the "high" limits?" "I prefer to keep my E36 M3.", was my reply. Once I have some employment monies rolling in again, I am seriously considering carrying a 1mil umbrella policy to cover my ass for anything over my coverage limits.

We actually have 250/500 liability on all vehicles with 100/300 uninsured and I'm still uncomfortable with that "small" a coverage. Maybe it's different for me because in both Germany and the UK, most of the liability coverage is a couple of million at the very minimum so having coverage in the low six figures is a little uncomfortable for me.

Plus, I've been bankrupt before (nothing to do with an accident or insurance claim) and I don't intend to lose what little I have worked hard for a second time around. Well, at least minimize the chance of that happening.

I thought the old addage 'as much as you can afford' applies to any form of insurance. The point being if you don't have alot of assets (including $) then you can't really afford much coverage, thus minimum might be just fine, otherwise you better cover your assets

if you have an old car it "usually" isn't worth carrying collision ins ... which is where the deductible would come in ... increasing your liability levels doesn't cost very much, and could really really be worth in the case of an accident