Broderick Law Firm LLC

How to Choose the Right Automobile Insurance

How to Choose the Right Automobile Insurance

Many people think of automobile insurance as something they’re required to purchase for the protection of others, or simply to avoid getting a ticket or facing driver’s license suspension. With that outlook, far too many simply default to the mandatory minimum coverage when choosing an insurance policy. Once the box is checked and the driver has an insurance card to carry in his glove box or proof of insurance in an app on her phone, automobile insurance typically gets little attention except when premiums are due. But, millions of people across the U.S. are injured or killed in automobile accidents each year. When you’ve been injured in a car accident or have injured or killed another person, the value of the right automobile insurance coverage suddenly becomes clear. The car insurance you purchase protects you and your family in two ways: by protecting your assets and income in the event of an at-fault accident, and by providing no-fault coverage for some losses suffered by you and your passengers. In this post, I’ll talk about how liability insurance benefits the policyholder and how to determine the right coverage for you. The second post in this series will address coverages designed to benefit you directly, such as personal injury protection, uninsured motorist coverage, medical payments, collision coverage, and smaller items such as towing and rental car coverage.

Mandatory Minimum Automobile Insurance

Massachusetts, like most states, requires that drivers carry certain types of automobile insurance coverage. However, like most states, Massachusetts sets coverage requirements very low:
  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $5,000 property damage liability per accident
  • $20,000 uninsured motorist coverage per person
  • $40,000 uninsured motorist coverage per accident
  • $8,000 personal injury protection
In New Hampshire, drivers aren’t legally required to carry motor vehicle insurance. Those who do purchase insurance must carry the following minimums:
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $1,000 in medical payments coverage
These numbers may sound significant out of context, but minimum coverage can be exhausted very quickly. According to Healthcare.gov, the average cost of a 3-day hospital stay is $30,000. That means a driver carrying mandatory minimum insurance coverage who puts another driver in the hospital for three days could be personally liable for $10,000 in hospital costs. If the injured person requires additional medical care, such as physical therapy or follow-up treatment, the direct costs to the responsible driver will climb. And, of course, the driver may be responsible for related damages, such as lost income and pain and suffering. After a serious accident involving catastrophic injury, death, or serious injury to multiple people, a driver without adequate insurance could be personally responsible for hundreds of thousands of dollars in medical expenses and other damages. In short, a driver who tries to save money by purchasing minimal automobile insurance coverage may end up paying dearly in the long run.

Determining the Right Car Insurance Coverage for You

Choosing car insurance coverage can be a balancing act. Of course, you want to protect your bank account, future earnings, and other assets. At the same time, auto insurance premiums can be a burden, particularly for younger drivers or those with limited income. One of the key considerations in determining how much automobile liability insurance you need is the value of your existing assets—especially those that are subject to garnishment or attachment in a legal proceeding. Obviously, if you have $100,000 in savings, a vacation home with significant equity, and two expensive vehicles with no liens, you have more to lose than a renter with no savings and a 15-year-old vehicle. However, current assets aren’t the only consideration. Many younger people who have not yet built up significant assets mistakenly assume they don’t have much at risk. It’s important to remember that wages can be garnished to satisfy a judgment in a personal injury suit, and that assets obtained after a car accident—even after entry of a judgment—may be subject to attachment for years. Worse, this type of large, potentially long-term liability is often entirely unnecessary. Increasing liability coverage significantly may increase your premiums far less than you might expect—often as little as a few hundred dollars per year. Be sure to thoroughly assess what you have at risk before making a decision about the amount of automobile liability insurance you’ll purchase.    

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