Many drivers struggle with the cost of insurance premiums. But the benefits far outweigh the consequences of driving uninsured. The average California minimum car insurance policy, 15/30/5, costs $611.
Instead of focusing on what you’re paying, look at what you’re protecting. Is $611 still too much? To understand the benefits of holding car insurance, let’s look at the protection you’d have with coverage and two worst-case scenarios with no insurance.
Over a lifetime, even cautious drivers will have fender-benders. Distractions, road hazards, and other drivers not following the rules-of-the-road can result in major and minor accidents. If everyone walks away without injuries, medical bills will not be a concern in a minor collision. If the property damage is slight and the vehicle is not a high-end automobile, damages may be less than California’s $5,000 minimum coverage.
In this case, the minimum coverage looks adequate. However, according to the 2019 Insurance Information Institute, the average property damage claim was $4,525. They based the costs on repairs done on a Chevy Malibu. Since that report was published, trending costs have doubled since 2010. Imagine if the accident had involved a Ferrari or BMW. The repair costs would most definitely exceed the liability minimum.
Now, let’s look at an accident where your minimums exceed your policy, and there are injuries and property damage involved. Bodily injures accompanied by damage to property can result in high medical bills and costly repairs. ICU stays alone are $3,000 or more per night. You’d be held responsible for any expense above the insurance coverage limit. According to the Insurance Information Institute, the average bodily injury claim is $18,417. Minimum coverage will help, but you will still be held accountable for the remaining $3,417.
There are several expenses you should be aware of: fees and penalties associated with the collision, costs for repairing your car, and any medical expenses generated as a result of the accident. To determine how much car insurance coverage you need, consider the following:
Insurance premiums do not cover state fines or penalties. Also, under the minimum protection, your car repairs and medical costs will not be covered by the policy. Do you have enough in your bank accounts to pay what becomes out-of-pocket expenses?
It makes good sense to carry the best possible car insurance coverage. It may cost more than the minimum limits, but in the long run, it’s worth the peace of mind of knowing you’re protected. After reviewing the worst-case examples provided, you can see that you are putting your finances at significant risk without that protection.