When drivers struggle with insurance costs versus how much it benefits them, they may ask themselves this question. The average premium for the legal minimum car insurance in Texas is $782. The minimum provides a driver coverage of 30/60/25.
Is that worth $782? Often policyholders overlook what they are protecting and instead focus on what they are paying. The best way to understand insurance benefits is to imagine likely scenarios and also the worst scenarios. Let’s illustrate both.
Likely accidents can be simple fender benders. Drivers, over their lifetime, even driving cautiously, can still be involved in minor accidents. A small collision because the driver was distracted is not uncommon. In this case, we assume everyone walks away from the crash without any injuries, so medical bills are not a concern. If the damages were minor, and the damaged car is a common and inexpensive make and model, your damages may come up to less than the $25,000 minimum required coverage.
The minimum requirements in Texas are more than in many other states. With that in mind, the average property damage claim in 2019 came to around $4,525, according to the Insurance Information Institute (III). This cost was on repairs for a Chevy Malibu. Statistical trends show that expenses have doubled since 2010. If you happened to damage a brand new luxury or sports car like a Maserati, repair bills could exceed your minimum coverage easily.
Let’s look at a worse-case type scenario, where injuries and damages exceed your coverage. When bodily injuries are a factor alongside property damages, medical bills become an exceptionally burdensome expense. The average night in the ICU alone can be more than $3,000. As medical and repair costs accumulate, you will be liable for any expenses above your insurance coverage. The Insurance Information Institute estimated the average bodily injury claim severity to be $18,417. Thankfully, if you have the minimum required liability insurance, you’d be protected for almost twice this amount.
But, these scenarios do not take into account three essential expenses: the fees and penalties for the accident and the costs of repairing your car and covering your medical expenses. Here is a list of factors you should consider when determining how much coverage you may need.
Penalties by the state are not covered by insurance. And your car repairs and medical expenses are not covered under minimum protection. The question that should come to mind is how much money do you have in your savings that you are willing to risk to cover state penalties?
A word of wisdom, if you can increase your coverage amount significantly, perhaps by a few thousand dollars, with only a slight increase in premiums, it’s well worth the protection. Your finances and lifestyle could be at risk without good insurance.