Are state minimum auto liability limits enough?
Two summers ago, I was driving into town from our rural, country home. It was a bright, perfect, sunny summer morning and I can still remember that I was listening to a story on NPR about a new hot jazz artist that had won acclaim at the Grammy’s when I attempted to skid to a halt. Unfortunately, I had reacted too late. My only excuse is that I was driving into the sun, but I completely blew threw a red light. I was driving a Ford Explorer and plowed into the rear end driver side of an early model PT Cruiser. A young woman hopped out of the car to survey the damage. I must have asked her half a dozen times if she was ok; I was horrified by my reckless driving behavior. She swore up and down she was fine and after the police left the scene, so did she with my insurance information in hand. That was Sunday. Less than 24 hours later the phone rang at my office. The voice on the other end of the phone identified himself as counsel at a local personal injury firm. The young woman I hit hard lawyered up.
The truth is I realize that many people think they are fine in the moment and wake up horrendously sore the day after an accident. I also know there are a lot of people out there looking for something for nothing. But in truth, the result is the same. I didn’t mean to hit her, but she is going to get compensated due to my negligence.
Here is what happens: No one disputes it was my fault. My liability insurance is 250/500/100. What that means is that there is $250,000 for one person’s medical expenses, rehabilitation, funeral costs, and other covered costs if you or your family are at fault in an auto accident. It also pays for settlement of lawsuits and legal expenses. ($500,000 maximum for all the people in her car, so this didn’t apply) and $100,000 for property damage. In this case, the damaged property was the PT Cruiser. I also held a $1,000,000 personal umbrella policy which kicks in for damages over and above the 250/500/100. In other words, she would have to have $1,250,000 worth of injuries before she could go after me and my assets personally.
Now let’s imagine for just a second that instead of 250/500/100, I held the required minimum limit in Kansas. It is a shockingly low 25/50/25. If she has more than $25,000 in injuries or $25,000 in property damages ( a Mercedes instead of a PT Cruiser for example), I would be on the hook for anything above that. In Kansas, assets can be seized to settle the debt or failing that, wages can be garnished. No one wants to lose their savings or income due to a car wreck!
The Ford F-Series is now that most commonly driven vehicle in America. The 2022 Ford F-150 (model with the least features) has an MSRP of $31520. In other words, with state minimum limits, you can’t get into an accident with the most common car on the road today without having to come out of pocket if it is totaled.
You may reason that you are a great driver and you may well be a better driver than me. I can concede this point. However, every time we get out on the road, we see drivers texting. More and more, the guy in front of you is not paying attention. If he unexpectedly slams on the brakes, with all the defensive driving skill in the world, are you sure you’ll stop in time?
There is good news though. Price per thousand, liability is the least expensive coverage you are likely to buy. You can easily set yourself up with the right limits. Most Auto insurance policies offer up to 500/500/500. In our opinion at Shepherd Insurance Group, we err on the side of making sure you have enough liability to make the insurance company more attractive than you in the event of a lawsuit. If you have $1,000,000 in assets, let’s make sure we get that umbrella. If you have $2,000,000 in assets. Let’s make that umbrella a $2M umbrella. What if you don’t think you think you have anything to lose? Think again. Your income can be garnished. Take your household revenue and multiply it by the number of working years you have left.
My final advice? Call your agent and ask what limits you have if you are unsure. Ask what limits they would recommend and get a quote (or better still, call us and ask for a quote!). Lastly, pay attention while you are driving. Accidents happen after all.