Whether you live in Little Rock or another part of the state, Arkansas Insurance Advisors brings a fresh approach to purchasing car insurance. If you have never worked with an independent insurance agency you will feel a sigh of relief after working with us. AIA is able to act like a broker on your behalf comparing your car insurance rates with the top companies in the business. This approach to buying car insurance not only saves you the hassle in the beginning but can be done at any time in the future, never again will you have to shop for insurance.
At Arkansas Insurance Advisors our job is to evaluate your current needs along with educating you on what limits of car insurance you need. While the State of Arkansas has minimum coverage limits of $25,000/$50,000/$25,000 you are required to carry, AIA takes a different approach of focusing on ensuring sure you have sufficient car insurance coverage in the event you are involved in a horrific accident. When deciding on the amount of car insurance coverage need to carry you should imagine the worst accident you have seen on the road and consider would you be sufficiently covered if somehow that happened to you.
Here is some food for thought before discussing what to consider when purchasing car insurance. According to rmiia.org, in 2013 there were 5,687,000 police-reported motor vehicle traffic crashes, 32,719 people died in motor vehicle crashes, down 3.1 percent from 33,782 in 2012. Of total crashes in 2013, 1,591,000 caused injuries and 4,066,000 caused property damage only. With statistics showing there are over 5.5 million reported car accidents per year, the questions is not if most people will be involved in a car accident but how bad will it be when it happens.
First, let’s evaluate what the minimum car insurance coverage limits cover. The primary limits, which cover your liability to someone or something else in the event you are at fault, are often referred to as $25,000/$50,000/$25,000 as shown above. The first number represents the amount of coverage the policy will pay for each individual person involved in an car accident; this example would provide a minimum coverage limits of $25,000 per person involved. The second number of $50,000 shown above represents the maximum amount of coverage for all people involved in an accident. While the per person maximum is $25,000, if there were four people involved in an accident this amount may be reduced per person since the collective total can not be greater than $50,000. The final number of $25,000 is the maximum amount of coverage for damage to any type of property. From a small accident involving backing into your neighbors mail box, a larger accident of collision with other vehicles on the freeway to driving through a store front the maximum amount of coverage is this limit of property damage. According to USA Today, the average cost of a vehicle in 2015 was $33,560. In the example shown above the limit of property damage was $25,000 would be insufficient if someone totaled even a vehicle of only average value, much less a high value vehicle.
Before reviewing the other coverage’s available lets discuss a few examples that could present a situation where your insurance coverage’s may not be sufficient and what happens if you are responsible for an accident that creates more damage than your car insurance limits will pay for. Here are a few examples that may require higher limits of car insurance coverage:
- Currently the cost of a 2016 Chevrolet Suburban can exceed $70,000. If I were to total a newer vehicle such as this I would need to have sufficient coverage to pay for the entire vehicle or I would be responsible for difference as discussed below.
- We all know we cannot who will be in the other vehicle if we cause an accident. What if the other person was a surgeon? When injury is caused to another person not only are you responsible for their medical bills but also loss of wages are likely to be paid for as well if they are out of work as a result of the accident. According to Forbes.com the average annual salary of a surgeon is $512,000. For this example, if a surgeon were injured due to a car accident and your insurance was responsible for only 3 months of wage loss the total loss of wages would be $128,000 not including medical bills. What if they were driving the Suburban referenced above; now the total would exceed over $200,000 in costs assuming nobody else is involved.
- Last, what if someone were killed in an auto accident you are responsible for? As referenced above over 30,000 people die in car crashes every year. It is impossible to assign a value to someone’s life but you can be assured the cost would be incomprehensible.
These are only a few examples that could lead to very costly car accidents. Now lets discuss what happens if I cause a car wreck and do not have adequate car insurance coverage to pay for the damages. If the damages from a car accident are greater than your insurance coverage’s you most likely will be held personally liable for the difference. There are a number of ways you may be held liable, here are a few:
- A specific judgement where you personally pay the difference of what was not covered by insurance.
- If you do not have the cash available an attorney may place a lien on your assets such as your home, bank accounts or retirement.
- If you do not have the cash or assets your future wages may be garnished for many years in the future.
The examples above clearly establish the need for not only carrying car insurance but the significance of choosing the appropriate limits of insurance. In addition to your liability to someone else it is also critical to carry uninsured and underinsured motorist coverage. Here is a map showing the percentage of uninsured drivers on the road:
Uninsured motorist coverage pays for medical bills for both you and your passengers in the event an uninsured driver causes a wreck with you and does not have coverage to pay for their damages. While only slightly different underinsured motorist coverage pays the difference if some has coverage but their limits of insurance are not adequate. Last, uninsured motorist property damage pays for damage to your vehicle in the event someone else causes damage to your vehicle that does not have insurance coverage or if there is a hit and run where it cannot be determined who was at fault.
There are many additional options regarding car insurance coverage that should be considered when making your purchase. Be sure to sit down with an independent insurance agent to discuss things such as towing/roadside, rental car coverage, reduced glass deductibles and which deductibles you should choose for your insurance.