How much car insurance should you buy?

It will be a different for every Bellingham driver, but here's a way to find the right level of car insurance for you.

The short answer, however, is you'll need at least the state's minimum requirement. In Washington, it is a law to have these minimal limits on your auto insurance policy: 

  • $25,000 of bodily injury or death of 1 person in any 1 accident.
  • $50,000 of bodily injury or death of any 2 people in any 1 accident.
  • $10,000 of injury to or destruction of property of others in any 1 accident.

That will allow you to drive legally, but you really need enough car insurance to protect your quality of life. It can be devastating to be in a car accident, even if no one is injured, if you are sued. The minimum amounts are not enough to pay for serious injuries or replace a newer car.

If you have nothing to lose - meaning, no savings and no assets - the minimum requirements might be enough for you. You would be considered "judgment proof" which means that if someone wanted to take you to court to pay for an accident that you caused, you could lose but it wouldn't mean anything. You wouldn't have any assets they could take. By nothing to lose, I mean that. Anything more than the clothes on your back and a very old, worthless car that was in the accident could potentially be taken from you to pay for the accident. If you have savings, or a home or even some expensive jewelry from your Aunt Sally, you are not judgment-proof, and could lose all of those things if someone you hit took you to court. Carrying more car insurance than the minimum will be necessary.

So how much liability and collision insurance should you buy? From the website CarInsurance.com:

First, here's what the numbers listed below mean:

The first two numbers refer to bodily injury liability, which pays the hospital bills of anyone you injure.

The first number is the per-person limit.

The second is the per-accident limit.

The third number is the property damage liability limit, which would repair or replace the car of anyone you hit.

  • 50/100/50: This level of coverage is recommended for those who have an older car, few assets, don’t drive much and are on a tight budget, for instance college students and retirees who are downsizing.
  • 100/300/100: This is the level most financial experts say is appropriate for middle-income earners with a typical level of savings, adequate in most circumstances. The cost of liability insurance, once you have bought the basic levels, does not increase exponentially. Moving to 100/300/100 will not cost twice as much as 50/100/50. In an analysis of rates, CarInsurance.com found that it costs just $96 more a year, on average.
  • 250/500/100: If you own an expensive home or have saved diligently, you may be worth millions even though you do not consider yourself rich. We would suggest supplementing even this high level of coverage with an umbrella liability policy that extends your protection by $1 million or more. It’s relatively cheap.

What about uninsured motorist car insurance?

Let's say you're the one at fault and only carry the minimal amounts of car insurance, and you've rear-ended a new Lexus. Need I mention the person you hit got whiplash? You would be considered under insured. The average treatment for serious whiplash could cost $30,000. So you'd better hope your accident victim carries uninsured motorist protection. And if you can afford it, you should buy this policy yourself.

In Washington, you are not required to carry uninsured/underinsured motorist protection, though insurance companies are required to offer it to all drivers. It is a good idea to purchase uninsured motorist coverage if you can afford it, because they can minimize your financial losses from deductibles and coverage caps. In other words, you can't afford to forego this coverage. It will pay your hospital bills if the driver who hit you can't afford them.

If you buy this coverage, it typically will come in the same amounts as your own liability coverage. Uninsured motorist coverage costs an average of $83 a year, according to a CarInsurance rates analysis. Interested? Here's a post on uninsured/underinsured motorist insurance for more information.

 

 

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