The Insurance Guy: Auto Insurance 'Risk Management 101'
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Sprint to your filing cabinet right now and do me a favor. Pull out your current Massachusetts Auto Insurance Policy. First of all, what is filed under? A for Auto, C for Car, I for Insurance or J Junk?
Just kidding about the J File. I can't imagine anyone feeling that their auto insurance policy has anything to do with junk or trash.
Now, glance down the Coverage Selection Page until you get to Part 5, Optional Bodily Injury to Others.
In my humble opinion, the numbers that are next to those words are the most important part of your Massachusetts Auto Insurance Policy. These numbers indicate how much will be paid out if you or a household member, or even someone using your auto with your permission, injures or kills someone in an accident and is found to be legally responsible. That is a pretty serious line item in the hierarchy of line items on an insurance policy.
So, what do you have for coverage on Part 5 as we speak? If you don't have a policy in force, or you have been canceled for non-payment, or your license is suspended, or your registration has been revoked, you may not have any coverage at all. That is certainly not the time to be in an at-fault accident in which you are found to be responsible. In fact, you shouldn't be driving that car at all because it is illegal.
But, getting back to the coverage you do have. If your policy shows $20,000 per person and $40,000 per accident, that is the state minimum that Massachusetts requires. It is good news that you are following the rules of the commonwealth, but do you really think that you have enough coverage? Again, what if you or a household member is in an accident, and injures or kills another person or several persons? How quickly would the injuries (or death) amount to at least $20,000? It really wouldn't take much these days. And if you injured several people, the maximum that your policy will pay out for that accident is $40,000.
It is not my intention to scare anyone. I hardly think the words in this column would do that. I do, however, wish to make a point about how important this particular coverage is in the overall scheme of coverages on an auto policy.
Beyond the $20,000/$40,000 limit of coverage, there are many options available to choose from. Carrying $50,000/$100,000 is a move in the right direction while carrying $100,000/$300,000 makes a great deal of sense these days.
Does it cost more money to carry more coverage? Yes, it does. But it is worth taking the time to compare the additional cost of carrying appropriate coverage versus what it would cost you if were underinsured at the time of a serious accident. I am sure you will decide for yourself that it is a wise move to carry the proper limits.
Dave Bissaillon dabbles in real life while working daily as an account executive at Smith Bros.-McAndrews Insurance Agency in Adams. His occasional column will touch on insurance and other fun stuff.
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