Time To Raise Your Coverage

Jim Tice
Written on September 9, 2016

I’m sure no one has to tell you how high medical costs are today.  Premiums for health insurance policies continue to rise much faster than the inflation rate, and you can hardly read a newspaper without another story about how some health insurance company or another is going out of business in certain states.

This was brought home to me when I had back surgery recently.  My five days in the hospital resulted in a bill of almost a half million dollars.   By the time my insurance company negotiated it down it still came to over $100,000!

When someone is injured in a car accident they can collect from the at-fault party not only their medical bills, but also lost wages and pain and suffering damages.  These easily can run as much or more than the medical bills.

Do you know the State of Indiana only requires that you have enough coverage to pay $25,000 to someone you kill or injure in a car accident?  And if there were more than one person hurt the law says you only need to insure up to $50,000.  It should be obvious that those amounts easily could be grossly inadequate.  If your insurance wouldn’t pay the injured person’s entire damages you could still be held personally responsible for the balance.  You could lose your house, or be forced into bankruptcy.

When our agency was established back in 1981 we made it a rule to never let our customers carry less than $100,000 coverage for one person and $300,000 for more than one.  We felt that was our responsibility to them.  If they didn’t want limits that high we preferred they insure somewhere else so that we would never have to look them in the eye knowing we allowed them to be underinsured.  (By the way, we never had a customer refuse those limits.)

Thirty-five years later we feel it is time to go to the next level.  We are asking our clients to carry at least $250,000 per person for bodily injury liability, and $500,000 if there is more than one.* This really is about the same amount of protection as we required in 1981 considering how prices have increased.

The cost to more than double the amount of coverage is surprisingly low – only about $35-60 per car per year.  It can be slightly higher, but is still worth the extra protection.

The same reasoning applies to Property Damage Liability.  The State only requires you to carry enough coverage to pay up to $10,000 if you are responsible for damaging someone else’s car.  With even the least expensive new cars costing double that today, and when new pick-ups can cost over $50,000, that amount of coverage is clearly not enough.  (I know of a man that hit a semi loaded with new Cadillacs several years ago.  I hate to think how much damage that caused.)

Therefore, we are recommending our customers carry Property Damage Liability limits to $100,000 if they are not already at that level.

(These limits should be the minimum.  It is also wise to carry a Personal Umbrella Policy which can provide additional millions of dollars of protection for surprisingly low premiums.)

We take our responsibility to protect you seriously.  That is what we are here for and that is why you carry insurance.  It only makes sense that you need much more coverage at today’s prices than you needed just a few years ago.  Please let us know if you have any questions or concerns.  As always, we are thankful for your business.

*Some policies have a single limit, in which case we would require $500,000.