Cheap auto coverage might be your most expensive choice!
First, consider why you should purchase auto insurance. The main reason is to financially protect yourself, your family, your passengers and other drivers.
The right coverage at the right limit is always the most important consideration when purchasing auto insurance. When you don’t have the right coverages at the right limits you end up paying a lot more out of pocket for claims than you can save with “cheap” premiums.
Take a moment to think about the “what ifs” of choosing cheap state-minimum auto insurance:
- What if you total your car in a crash that causes no injuries or other physical damage? What is covered?
- Or worse, what if you cause a crash where the other car involved is newer, the passengers are injured and your car is totaled? What is covered?
- What if you get hit by an uninsured or underinsured motorist? Will your current insurance bring you back to your pre-loss condition?
Let’s start with understanding the basics. Insurance is designed to help you in two ways:
- First, liability insurance will help pay property damage and bodily injury to the other party(ies) involved in situations where you are legally obligated to pay. Think at-fault crashes. This coverage is mandatory in almost every state but provides no coverage for your vehicle.
- Secondly, Comprehensive (Comp) and Collision will cover you and your property in a crash. Although the government may not mandate this coverage, if you have a loan on the vehicle, your bank certainly will mandate that you have coverage.
Having liability, comprehensive and collision coverage is often referred to as having full coverage.
Most people will think of “cheap” insurance as having the state minimum requirements. In Ohio, those limits are $25,000 in bodily injury per person, $50,000 in total bodily injury per accident and $25,000 in property damage per accident. You will pay out of pocket for anything not covered or any costs above the limit. A few things to remember about state minimum coverage:
- It does not cover you or your vehicle.
- It does not cover you if an uninsured or underinsured motorist hits you.
Even if you have coverage, think about the low state minimum coverages how they relate to actual costs:
- $25,000 is the most an insurance company will pay for an individual’s bodily injury. Consider that as of January 1, 2023, the Cleveland Clinic lists the following costs:
- Room and board: as much as $6,156 /day
- Emergency Department Charges (just accommodations): as much as $2,728/day
- Operating room: as much as $4,644 for every 30 minutes
- That $25,000 coverage could go very fast leaving you to pay the rest out of pocket!
- $25,000 is the most an insurance company will pay for property damage to the other car (it pays nothing for yours). Keep in mind that the average new car price is $49,507 according to Kelley Blue Book. What happens if you were to total a car worth $50,000? Your “cheap” insurance will exhaust its limit by paying $25,000. You will then pay out of pocket for the remaining $25,000!
The right coverage at the right limit is always the most important consideration when purchasing auto insurance. Otherwise, that “cheap” premium might be your most expensive choice!