One of the most common requests I hear as an insurance agent is, “I want the minimum coverage, only what the state requires!” Today I will discuss why that's a dangerous request, how much it could cost you in the long run, what Bodily Injury Liability actually is, and how much should be on your car insurance policy.
What is Bodily Injury coverage? Bodily Injury Liability coverage (sometimes referred to among insurance industry professionals as just BI) is a very important coverage when protecting against lawsuits resulting from an accident that is deemed your fault. Bodily Injury coverage pays for medical bills, lost pay, rehabilitation treatment, and even funeral costs if anyone were to be injured or killed by your vehicle. Bodily injury will even go as far as to pay pain and suffering damages in the event that a third party successfully sues you.
The limit options for Bodily Injury are $10,000/$20,000; $25,000/$50,000; $50,000/$100,00; $100,000/$300,000; and $250,000/$500,000. The first number is how much the insurance company will pay per person in an at-fault accident, and the second number is how much the company will pay total for the accident under the bodily injury coverage.
For example, imagine that you're the at-fault driver in an accident and you're carrying a BI limit of $10,000/$20,000. If the other driver's medical bills were $10,000 after their PIP, and the passenger's medical bills were $15,000 after their PIP, your Bodily Injury would cover the driver's medical bills just fine, but the passenger's medical bills would only be paid up to $10,000. Guess who gets left with the balance... That's right, you do!
This is why Bodily Injury is considered by personal risk management experts to be the most important coverage you can carry. When something like the example above occurs, usually the injured person/people will come after your assets (and even your future wages).
The interesting thing about Bodily Injury is that the state does not require you to carry it, but if you get in an accident that is your fault and you injure someone, you are liable to pay their damages. If you can’t afford to pay their damages, you can lose your drivers license until you pay off those damages. The state can even garnish your wages until the damages have been paid.
Consumer Reports recommends that you should carry as least $100,000/$300,000 as a minimum, and if you have sizable assets, you should consider $250,000/$500,000.
Carrying higher limits can save you a lot of trouble down the line in the event of an at-fault accident, but having higher limits can also save you money as well! The higher the Bodily Injury limits you carry, the greater the discount you'll receive when shopping for a new policy. Most companies won’t even give a discount for prior insurance if you don’t carry Bodily Injury coverage. So in the long run, having higher limits can get you bigger discounts when shopping for car insurance, and will make you a more attractive client to most insurance companies.
Although Bodily Injury Liability doesn’t pay for damages done to you, it is a very important coverage to carry. Unfortunately, the state does not require you to carry this coverage until it's too late. So make sure you are properly protecting yourself when shopping for car insurance, and if you don’t know what you have or should have, ask your agent, or email or message me on Facebook or Twitter. I would love to help you get the proper coverage!
Read part one (Personal Injury Protection) here.
Read part three (Uninsured Motorist Coverage) here.
Read part four (Property Damage) here.
Read part five (Other Coverages) here.