Saving a Buck?

We are all inundated with advertisements for cheaper insurance. In today’s economy, who wouldn’t want to save a buck? I would encourage you though to be smart! Consider this scenario:

Good news: You recently spent 15 minutes on the internet and saved $15 bucks each month on your car insurance. Wahoo! (Realistically, that’s $180 per year or 50 cents per day. But, it’s still money in your pocket.)

Bad news: After making the switch, you rear-ended a dude with an ego bigger than Milwaukee. He’s driving his “sweet ride” (i.e., his 'baby') and you are about to find out whether your 15-minute insurance coverage is worth its salt.

Let’s consider, what’s really important when it comes to car insurance? Certainly saving some dough is good (and we all want to do that). But, you need to make sure that your insurance coverage meets your needs and doesn’t put you at risk. Here are some things that I would suggest are of greater importance than just the cost of car insurance:

1. In Texas, if you cause the damage you pay the bills. If you do not carry enough insurance to cover the costs (like the previously mentioned $90,000 luxury car), then the remaining amount will come out of your pocket! Carrying lower liability limits is one way that the 15-minute insurance companies can get you 'cheap' rates. However by doing so, you take on extra risk. If you have retirement savings building up or college education funds tucked away, you definitely don’t want this $90k car accident to tap into your savings or wipe them out completely. Accidents can happen at any time. Make sure you’re adequately covered.

2. Consider next that you not only rear-ended the guy, but he suffered severe injury. I know of one instance where a driver struck another car and caused significant damage to the other drivers’ hands. The other driver was a surgeon. In this case, the one at fault had to not only cover medical costs (which can be steep) but also lost wages (which the surgeon was also paid well). Again, make sure that you’re not just carrying the state minimums because the “minimum” may not be enough.

3. The number of uninsured drivers in Texas can also create risk. If one of them hits you and you can't work for awhile, what's the chance they're going to have enough money to cover your medical bills, work loss, and pain/suffering? (Answer here is “nil”.) It is true that they owe the money to you but you're probably not going to get much out of them if they can’t afford any insurance. (An "IOU" does not carry well when you're trying to pay your electricity bill.)  Carrying higher uninsured motorist coverage is a wise idea. Providing lower coverage is another way the 15-minute insurance providers lower your cost but don’t necessarily lower your risk. Be careful and know what you’re buying.

This is why it’s important to have a professionally licensed insurance agent. Someone to talk you through your policies and make sure that you know what you’re buying and how you’re covered. Someone to call or e-mail directly and personally. Sometimes that extra money saved may not be worth the risk. A personal insurance agent can help. Give me a call at 512.686.2904 or e-mail me at csimpson@farmersagent.com for a free policy review to see how your coverage stacks up.