What You Should Know About Auto Insurance Coverages

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Automobile insurance is a critical aspect of our lives, providing financial protection in the event of accidents and personal injury.  However, a common concern among policyholders and those affected by accidents is the low insurance limits that automobile carriers offer.  

Understanding Insurance Limits

First, what are insurance limits?  Insurance limits refer to the maximum amount of money an insurance company will pay for a covered claim.  In the context of automobile insurance, these limits typically include:

1. Bodily Injury Liability: This covers medical expenses, lost wages, and pain and suffering for individuals injured in an accident caused by the insured driver.  In Indiana, drivers must have at least $25,000 in bodily injury liability per person and $50,000 per accident.  For example, if you cause a wreck that harms multiple victims, the most your insurance company will pay will be $25,000 to one individual and $50,000 total.   

2. Property Damage Liability: This covers the repair or replacement of vehicles and property damaged in an accident caused by the insured driver.  Indiana motorists must have a minimum coverage of $25,000 in property damage liability.

3. Uninsured/Underinsured Motorist Coverage: This protects you if you are involved in an accident with a driver who has insufficient insurance or no insurance.  Because people without car insurance drive on our roads every day, it’s a good idea to purchase uninsured motorist coverage to protect yourself.  Also, because many drivers carry the minimum amount of insurance required by the State, you may want to protect yourself by obtaining “underinsured” coverage.  If you are injured in an accident, this coverage, purchased by you, could be used in the event the other driver did not have enough insurance to pay for the harm done.  Insurers are required to offer policyholders no less than $50,000 in uninsured motorist coverage for bodily injury.  Although you may decline this coverage, doing so could threaten your financial security in the event of a wreck with an uninsured or underinsured motorist.

4. Medical Payments Coverage: This covers medical expenses for you and your passengers, regardless of fault.

Why Are Insurance Limits Low?

Various arguments have been advanced as to why the state-required insurance limits are so low.  Some say that insurance companies need to strike a balance between offering comprehensive coverage and keeping premiums affordable for policyholders. Higher limits mean higher premiums, which can be unaffordable for many drivers.  If drivers cannot afford the premiums, the argument goes, some drivers may not obtain any insurance coverage at all. 

However, the minimum insurance required has been $25,000 for decades.  During this period, the cost of healthcare has skyrocketed.  Even in a car accident where one takes an ambulance to the Emergency Department and undergoes imaging studies, the medical costs can approach $25,000 in some cases.  There was a push a few years ago to pass legislation in Indiana to increase the minimum coverage, but those efforts were unsuccessful. 

It may seem frustrating for many that the insurance limits for automobile carriers are low, so it’s essential to understand your insurance needs and evaluate whether the standard limits provided by your automobile carrier are sufficient for your circumstances. If you have concerns about the limits, you can explore options for additional coverage to ensure you have the protection you need in case of accidents and personal injury.  

If you or someone you know suffered injuries due to accident that wasn’t their fault, give us a call at (317)-526-4630 to help you navigate your case.