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Auto Insurance
Auto Insurance is the most common form of insurance on the market today. The reason is very simple, it is required to be purchased by every driver according to state law. There are several parts of an auto policy. If you have a copy of your current policy it will be broken down similar to this. The liability portion of your auto policy is what pays for damages done in an accident that is deemed to be your fault. The state minimum for liability insurance is 20/40/15. The first number is the limit of bodily injury protection per person in the accident. The second number is the limit of bodily injury per accident and the third number is the limit of property damage per accident. As you can tell the state minimum coverages were developed a long time ago and do not reflect adequate coverage today. Here is an example of what would happen if you were in an accident with minimum liability coverage. Lets say you ran a red light on your way to work one morning and hit a Ford Explorer with a family of four inside. The Explorer has a book value of $21,000 and is totaled. Your property damage limit is $15,000 so you are liable for the remaining $6,000 out of your pocket. The family inside suffered mostly bumps and bruises but the father also broke his leg. The medical bills are $24,000 for the broken leg but your limit is $20,000 per person leaving you on the hook for another $4,000. The father is also out of work for three months while the leg heals and you are over your limit so the $3,000 per month is going to have to come out of your pocket. This is a very typical accident that happens everyday in Houston. At the end of day you are left paying this family $19,000 and hoping that they don’t go looking for a personal injury attorney to inflate that amount. The moral of this story is don’t carry the minimum liability amounts. Uninsured / Underinsured Protection This covers you against the 35% of Houston drivers that are on the roads without having even the state minimum liability protection. If you are hit by someone that has no insurance or if their limits are not high enough to take care of the damage that they did, you will still be covered. The limits will look very similar to your liability coverage, 20/40/15. This coverage is available to you regardless of fault in an accident. It is designed to help cover the cost of medical deductibles and co-pays. Personal Injury Protection (PIP) also covers lost wages at 80% of full pay. I do not recommend PIP because most people have sick days at work that can be used at 100% of their pay and the coverage is twice as expensive as Medical Payments coverage. One advantage to PIP and Med Pay is that the coverage is multiplied by the number of people in the car. Your passengers are covered the moment they put their seatbelts on. This coverage is normally in increments of $2,500. These are what are normally referred to as “full coverage”. They are not full coverage because there are several exclusions listed in the policy most of them revolving around intentional acts of destruction. These coverages are what pay to repair or replace your car if it is damaged or stolen. There is a deductible that can be controlled by the insured. The typical deductible is $500, but $1,000 deductibles are becoming more popular as people look for ways to keep their coverage cost low. Each company has some extras that they offer to their customers. The two most popular are towing and rental car reimbursement. These coverages are usually very inexpensive and well worth the money. The towing will have a per tow limit of $80 or $120. With the cost of tow trucks in Houston I highly recommend the $120 limit. Rental car reimbursement will have a daily limit and an overall limit. The coverage may look like, 35/1050. What that means is you have up to $35 per day for no more than 30 days ($35 x 30 days = $1,050). |