While there are minimum legal requirements for auto coverage, this minimal coverage may not get you off the hook in many cases should you actually be involved in an accident. The state's goal is to make the required insurance affordable, but in many cases this results in minimum coverage that is not adequate for most people to drive on the road and meet their true financial obligations. Even limits that are several tiers above the minimum may not be adequate for some drivers, because once those limits are exhausted, any remaining damages must be paid out of pocket.
Bankruptcy is the first thought that comes to the mind of some, but bankruptcy does not come without problems. Bankruptcy will probably hurt or even eliminate your chances of getting credit in the future; even if credit can be obtained, it will cost you a lot more and come with conditions. In addition, many employment backgrounds checks include a credit check. Also, bankruptcy is not always an available option, especially if you have assets or own property. Because the costs and lost opportunities that result from bankruptcy are significant, it's not an option most people want to or should choose. For that reason, this article discusses your obligations and how to minimize your risk of ever filing for bankruptcy, losing your home, or paying for damages that could be covered by higher liability limits.
Let's look at an example of how coverage applies. Suppose that you have $100,000 of coverage, your car's brakes fail, and you rear-end the car in front of you with very high impact, paralyzing the driver. Do you think $100,000 would be sufficient to pay for a lifetime of medical care and lost wages? Would you settle for that amount if you were paralyzed? Chances are most would not. Accidents like this can happen to anyone, and planning in advance can help you to avoid serious trouble and serious financial consequences if an accident should occur.
Once your limits have been paid by the insurance company, it becomes your obligation to pay for any further damages. In the example mentioned in the previous paragraph, if the injured party is justified in asking for $3 million, your insurance company would pay the $100,000 for which you are covered and you would then be expected to pay the remaining $2.9 million. Alternatively, the injured party could take you to court and this could easily cost you hundreds of thousands in legal fees in addition to any judgment granted to the plaintiff. Filing for bankruptcy would also be an option, or, if you have assets, you would have to pay what you have and possibly lose everything. Your wages also may be garnished to pay any judgment.
In any case, not having adequate liability let alone minimum limits set by the state are not really a solution. Premiums in most cases are not significantly more, and also an umbrella policy available in increments of a million would cover liability for all the cars in your household for one low premium. With such options available, why risk damaging your future with a bankruptcy or, worse yet, losing everything you own because you did not plan in advance to set up coverages that would protect you? It does not cost you anything to discuss the options with your agent. You may also wish to consult with your attorney or a personal injury attorney who can point out the importance of making sure you properly address your liability limits.
If you have questions or concerns on this issue, do not hesitate to call Zeiler Insurance and speak to one of our customer service representatives. As an independent agency, Zeiler Insurance prides itself with quality customer service for the people of the Chicago-land area and the rest of the Midwest. Customer or not, we can review your insurance and see if you are being protected appropriately for the right price.
Dan
dan@zeiler.com
708.597.5900 x134