#1 The 25/65 Peril in Bodily Injury Liability Coverage
This is coverage that protects you from being sued if you are the at-fault driver in an accident and you injure someone. The 25 refers to a limit of $25,000 per person you injure. Your insurance will pay up to $25,000 for one person’s injuries. Any amount above that, you are responsible for. What if someone loses a limb or the ability to earn a living due to an accident you caused? $25,000 would certainly not be enough. The 65 refers to $65,000 which would be the total amount that our insurance would pay for an incident. If three people were in the other car and each had $30,000 in medical bills, you would be responsible for anything over $65,000, which would be $25,000.

#2 The danger of having only $15,000 in property liability coverage
Property liability coverage refers to damage you cause to someone else’s property. What are your car brakes and your car knocked down the wall of a house? What happens if you hit a $60,000 Mercedes? In both cases, you would be financially responsible for the amount greater than $15,000. With so many expensive vehicles on the road, it wouldn’t be hard to come up with that amount to repair a damaged car.

#3 The danger of only having the required $3,000 in PIP
PIP refers to personal injury protection coverage. This is required coverage in the state of Utah and is important because it allows everyone to benefit from medical coverage, whether they are at fault for the accident or not. Some states do not require this coverage at all. But Utah is a no-fault state, which means no-fault must be proven for medical coverage to kick in. The danger of having the lower limit of $3,000 is that it is not enough coverage in the event of a serious injury. A trip in an ambulance and a visit to the emergency room will practically consume that amount immediately.

Your $3,000 PIP would also be the limit on what your insurance would pay if you were driving with passengers in your car when an accident occurred. What if he lost control of his vehicle on a patch of black ice and hurtled into a ditch? If you have multiple friends in your car who were seriously injured, the $3,000 PIP for each probably isn’t enough for your medical costs. Imagine the devastation you would feel from not being able to adequately cover your financial burdens due to an accident that occurred in our vehicle.

#4 The danger of not having comprehensive and collision coverage for your own vehicle
Comprehensive and collision coverage are optional coverages. These are the ones that cover actual physical damage to your vehicle. You can choose higher deductibles to help keep your premium low if you want. Any deductible you choose will be deducted from the amount the insurance would pay for damage to your car. For example, if you backed into your garage and damaged your car in the amount of $1,800 and your collision coverage had a $500 deductible, then $500 of $1,800 would be deducted and you would receive $1,300 for the repairs. You would be responsible for getting the other $500 for the body shop. Collision coverage covers collisions only.

Comprehensive coverage covers anything else that could damage your car. Hail, wind, ice, fire or vandalism. This is also the coverage that kicks in when a rock hits your windshield on the highway and breaks it. You usually carry a deductible as well. Comprehensive and collision coverage are the most expensive coverages because they are determined by the value of your car. The newer and more expensive your car, the higher the premium for this coverage.

These coverages are optional unless you have a lien on the car. The lender will require that your financial interest in the car be covered in the event the vehicle sustains any damage that diminishes its value. If our insurance coverage ever lapses, your insurance company will notify your lender and they may add their own insurance premium to your loan. This is very expensive and comes with a high deductible and you don’t want this to happen.

In case you decide you don’t want to carry comprehensive and collision insurance on your car, just make sure you’ll be able to afford to replace or repair the damage in the event of an accident. If your car is old and not worth much, skipping coverage may be financially smart because of the premium you’d save.

#5 The dangers of not having any UM/UIM coverage
UM refers to uninsured motorists and UIM refers to underinsured motorists. You may wonder why you would need to have insurance if the other person doesn’t when required by law. This is a good question and the answer is because some people break the law and drive without insurance and others make poor decisions and choose the minimum liability amounts required by the state. These same drivers are probably the ones who are careless drivers and are causing accidents. If you get hit, you’ll want to protect yourself and your passengers. The premium for this insurance coverage is minimal and well worth the extra few dollars in premium.

It’s in your best interest to sit down with your insurance agent and review each of your coverages to make sure your limits are sufficient and accountable for your needs now and in the future.