The Cheapest Insurance

 That's how they reel you in, with taglines that say they have the cheapest insurance and tell you how much you could save if you switch.  There's no doubt that saving money is an important thing and some of the companies that say they can save you money, really can. But you don't always want the cheapest, in fact there is a long list of things that most people would find important enough to make sure they are paying for quality and wont mind a higher price tag.  Below is a short list of things you might not want to go cheap on.

• Parachute packing,
• Bullet proof vests
• Brake job
• Scuba tank
• Fencing at Jurassic World

Okay, so some of those were funny but the point is if it's really important you will pay whatever it takes to make sure it's done right. For me clothes are good to have but if I can get them cheaper I don't really care what they look like, but some of you will pay a lot of money for the right set of shoes or the really cool jacket. Is insurance in that category for you? I'm going to explore the importance of insurance and the cost compared to what's really important. There are ways to get lower pricing but you want to make sure that you are covered for what you need.

So let's start with auto insurance; is state minimum coverage enough and can you save money by just getting the minimum that the state requires. The short answer is yes you can save a little bit but no it is usually not enough.  Liability insurance for your auto is for the other person if there is an accident and it is determined to be your responsibility. However, it is there to protect your assets and income.  If you don't have enough liability to cover the medical bills of the other person, you can be sued for the rest. The average cost for inpatient hospitalization following a motor vehicle crash is $57,000 and just  an emergency helicopter ride is about $40,000. That's a far cry from the $25,000 per person minimum coverage required in the state of Indiana, imagine if there were two people in the car you hit. 

Let's say that you hit a 2020 Ford F150 Lariat on the highway at 65 miles an hour and there were two people in the truck, one needed a medivac and the other rode to the hospital in the ambulance.  The victim that rode the helicopter to the hospital stayed 2 weeks and the other stayed 2 days. Patient one is at $40,000 for the helicopter and $39,000 for the stay not counting the time in the ICU. So you would owe $54,000 for their medical out of pocket.  Patient two would would only have about an $8,100 medical bill so your policy would cover them, however the pick is worth $45,000 and is totaled so you would owe $35,000 plus the $54,000 from the medical bills for a grand total of $89,000. 

So, looking at the possible results, in today's economy the state minimums for Indiana are not enough to protect your assets and not enough to cover the average medical bills arising from an auto accident.  But how much do you save?  I mean that is the real issue here right?  Let's run a quote on a common carrier for a standard person.  Let's say he is a man in his 40s with 2 claims in the last couple of years but no tickets. He has average credit and a decent insurance score and owns a 2012 Chevy equinox.  If we compare a full coverage quote with $1,000 deductibles at state minimum (25,000/50,000/25,000) to the same deductibles and 100,000/300,000/100,000 liability limits (the first number is the per person bodily injury coverage / the second number is bodily injury per accident / the third number is the liability coverage for property damage).

State minimum it would cost our guy $114 a month and for the much higher coverage - drum roll please - $128 a month.  So for the cost of a cheap pizza (one topping) you can get real coverage and not worry if there will be enough if you have an accident.  That's right $14 a month for four times the coverage.  So do you want to risk paying $50K plus out of pocket or just pay an extra $14 a month?  That's 50 cents a day for an extra $250,000 in bodily injury coverage per accident. Sounds silly - right? Who would risk it for $14 a month. But believe me they do, everyday.

Getting the right coverage is not just smart to protect you assets it is responsible. You need to make sure that your policy has enough money to pay for reasonable medical costs associated with the accident and to replace their damaged property. Almost 16% of Indiana drivers don't have any auto insurance so how many do you think are driving around with just the bare minimum? 

Insurance is not a commodity, it is risk management and that looks different for everyone. Some people have more assets to protect, some people and a higher tolerance for risk and some people want to eliminate as much risk as they can.  No matter what any so called expert says there is no one size fits all for any insurance policy, whether it's auto, home or life insurance, you are unique in your needs, your budget and your tolerance for risk. Talk to an agent (one that gives you the real truth) and talk through your insurance program and what you want it to do for you.  Until next time, be safe and stay protected.

jasonedwards@shelterinsurance.com