If you understand the way that insurance works, the words "minimum limits" probably inspire close scrutiny. If you don't understand how insurance works, that is why we are here. Ask, learn, and grow. The more you know the better your protection.
Insurance protects you against those unforeseeable disasters. Beyond the easy answers of fire, flood, earthquakes, car accidents. It can cover anything from theft and injuries, to the more intangible cyber and professional liability. Insurance is collective money to help cover disasters that would be hard to handle by any one person. It's a safeguard against the unthinkable.
So what are limits of insurance? They are the maximum amount of money (the limit) that will be paid on your behalf in the case of a covered loss. That is, if your policy agrees to pay for what happened, then you will get up to the amount of insurance you bought. Your limit of insurance. This can be a number picked by you (i.e. - my stuff is worth $20,000) or can be specified by the minimum limit in your state (i.e. - Washington requires at least $50,000 in bodily injury coverage for auto insurance).
So why would you want to look at those minimum limits with such scrutiny? Because minimum limits are just that, the minimum you can buy. While that may be enough coverage, it may not be, and you need to look very closely at that. Being under-covered does not protect you. Let's take a car accident for example. If you have the minimum amount of personal insurance on your family car - you have $25,000 for any one person in any one accident, and $50,000 for any 2 people in any 1 accident, with $10,000 for property in any 1 accident. This means that you have a total of $60,000 for any given accident, to be split amongst the individuals who are injured, with no more than $25,000 to any given person, and no more than $10,000 for any property damage (guard rails, lawn, trees, houses etc.).
Let's say that you have a really bad accident in the middle of an intersection - you run straight across a red light, swerve, hit another car followed by a light pole which falls over leaving a big hole in the sidewalk, and ruining the traffic lights. At least three people are injured, and they all need to go to the hospital. Let's just say that you are completely responsible. You have no more than $60,000 in insurance to cover that. Are you starting to sweat yet? Anything that runs over that $60,000 is still your responsibility. It doesn't just go away after the insurance pays out. Worst case, you even get sued. Now your legal fees are also wrapped up in that. If you had more insurance coverage, your insurance would pay for those legal fees as well. At least up to that limit of insurance.
Feeling like you want to check your policy? We would love to help you. Often increasing your limits is less money than you think, or you can use an umbrella to cover everything, like an extension to your limits. Give us a call at 800-843-2430 and we'll help you decide what is best for your life. After all, insurance is there for a reason - to protect you from the unthinkable.