The idea of purchasing car insurance is not very exciting, but the coverage you select is one of the most important financial decisions you can make for you and your family. Here are four things you should know about buying car insurance.
1. You should select more than the minimum limits for bodily injury coverage. In Georgia, drivers are only required to have limits of $25,000 per person and $50,000 per occurrence for bodily injury liability coverage. While this is all that is legally required, you should make sure your policy has higher limits because in the event you do cause an accident and injure somebody, you want to make sure that you have enough insurance to cover their damages. If your insurance coverage is not sufficient to pay for their damages, your personal assets could be at risk. I recommend that people purchase limits of at least $100,000 per person and $300,000 per occurrence. Although more coverage is desirable if you can afford it, this is a good starting point.
2. There is no such thing as "full coverage". When I ask clients about the type and amount of coverage they have, they often tell me they have “full coverage". “Full coverage” could mean a number of things, and although many people use this phrase, it has no legal significance. It is important that you read your entire insurance policy to understand the coverages that you have purchased and any exclusions that may apply.
3. What is medical payments coverage? I like to think of medical payments coverage, or “med pay” as it is commonly referred to, as health insurance for you in the event you are in a car accident. Med pay can be used to pay your medical bills in the event you are in an accident. This coverage applies regardless of who is at fault, and it can even apply if you or someone else who is classified as an insured is not in a car at the time of the accident (for example, pedestrians, bicyclists, etc. who are struck by a car). Even if you do have your own health insurance, you should still purchase this coverage because it can be used to pay your co-pays and deductibles. You can purchase medical payments coverage in a variety of limits, but $10,000 is what I often recommend.
4. And last but not least, make sure you purchase uninsured motorist coverage. I cannot stress this enough, but you absolutely should get uninsured motorist coverage (or “UM”, for short). What is UM coverage? UM can be used to pay for your damages (and anyone else who falls within the definition of an “insured”) when the at-fault driver either has no insurance or not enough insurance to cover your damages. The default rule in Georgia is that the insurance policy affords UM coverage in limits equal to the limits of the liability coverage you select; however, you can select lower limits, and you can even reject UM coverage altogether. With many drivers out there carrying minimum limits, and some having no insurance at all, it is critical that you have UM coverage. As with liability coverage, I recommend that your UM limits be at least $100,000 per person and $300,000 per occurrence. Also, make sure that the UM coverage you purchase is add-on, or excess, coverage. This type of UM applies in addition to whatever insurance the at-fault driver has.
While a lot more could be written on the topic of purchasing car insurance, in my view, these are the most important things you should know when selecting the types and amounts of coverage you want.