WHY PROFESSIONALS NEED MORE CAR INSURANCE
"Oh, but we have full coverage," is a phrase I hear at least three times a week from people of all levels of education and income. The worst part is when I have to break it to them that they are not as "fully covered" as they thought and the car wreck they were in will end up costing them a lot of money because of it.
Insurance is something many people have a love/hate relationship with. In some cases, it's what allows a victim to fully recover from a bad incident that shouldn't have happened instead of ending up in debt and a lifetime of pain from that same incident.
In other cases, people who have spent years paying for insurance coverage are left feeling frustrated and helpless when they are told that their policy excludes their particular injury, damage or situation.
But love it or hate it, paying for insurance is a part of the world we live in, and the more you have to lose, the more insurance you should consider.
What most Louisianans consider "full coverage" is the coverage required by law in the state of Louisiana. Louisiana law requires drivers to carry a minimum amount of liability insurance coverage. In the industry, we call it "minimum limits" or "15/30/25". Liability insurance helps you compensate someone who is injured or has property damage caused by you. It's helpful to you because it lessens what you may have to pay out-of-pocket if you cause a wreck. And it's helpful to members of the community because it gives them a chance of getting their property fixed or getting the medical treatment they need after an injury caused by someone else.
SO WHAT DOES THAT HAVE TO DO WITH ME?
If you are a professional in 2020, chances are you make a decent salary. And if you make a fairly decent salary, you probably have assets...savings accounts, vehicles, homes, and so on. The more assets you have, the more at-risk you are for losing such assets if you cause injury to someone else, especially if you don't have adequate insurance.
For example...say you have the minimum insurance required by law and feel pretty good since you are "fully covered". But then while trying to respond to a work email or submit your online grocery order, you don't realize that you ran a red light and slam into a vehicle causing it to collide with another vehicle. The occupants of both vehicles are pretty badly injured, and their vehicles are banged up as well.
Your "full coverage" liability policy is not going to go very far. For one, it will only cover up to $15,000 in bodily injury for a single person, and up to $30,000 in bodily injury for the entire wreck. If those injuries are anything more than minor, their medical bills will exceed those limits very quickly. And that's not even considering the lost wages and pain and suffering they may experience and are entitled to seek compensation for.
So then what to do they do? They seek a personal judgment, or "excess judgment," against you personally for the amount they are entitled to that exceeds what your insurance policy will pay.
So say one of the injured people files a lawsuit seeking compensation and is awarded $100,000 in total damages. If your policy is a minimum limits 15/30/25 policy (statistically speaking, if you live in Louisiana, this is likely) then your insurance company would only pay up to their policy limits of $15,000, and you would be responsible for the remaining $85,000.
Most people don't have $85,000 sitting in the bank, but if you have assets, including a decent paying salary, those assets could be used to satisfy the judgment against you.
Someone once described insurance to me as either a bet for yourself or a bet against yourself. Buying insurance is making a bet that if something bad were to happen, you would not have the ability (or desire) to pay out-of-pocket for it. On the other hand, not buying insurance is making a bet that you would be able to cover the financial consequences of a disaster.
There's of course nothing wrong with being financially secure enough to be able to write a large check in the event of a disaster. And saving for a rainy day is a great habit we all should practice. However, in my line of work, I've sadly seen too many people left in really unfortunate financial binds after a tragedy, so I will always opt for good insurance coverage.
If you are a professional, do yourself and your family a favor - check to be sure you are adequately insured. You've worked hard to get where you are, and you don't want to face wage garnishments, selling your hard-earned property, or even bankruptcy after an unfortunate event.
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