Liability Only or Liability on Steroids? – THE ACTUAL VALUE
We are asked this question on multiple occasions. “Should I drop this vehicle down to liability only or not?” ….. Well the answer is…. It depends!
Let’s first understand the background so we can calculate this decision precisely!
Auto insurance in Texas is regulated by the Texas Department of Insurance. Every state has its own governing body which manages the insurance laws, procedures, and practices. They serve as the law enforcement agency ensuring the protection of both the insurance company and you as the consumer.
In Texas, the minimum amount of liability insurance required to operate a vehicle “Legally” is $30,000/$60,000/$25,000. You may, like many have seen this before but never really understood what it meant. Let us explain…...
$30,000 – Bodily Injury Any One Person Limit – This is the amount of coverage you have in place for injuries caused to one person in the other vehicle. NOTE: Has nothing to do with you OR anyone with you.
$60,000 – Bodily Injury Any One Accident – This is the amount of coverage you have in place for injuries caused for any one accident in the other vehicle. NOTE: Has nothing to do with YOUR vehicle or anyone with you. Yes…... We know what you’re thinking… If you hit a van with 8 people this will not be enough to cover the medical expenses, lost time of work, medications, etc. Nonetheless, this is how limited state minimum really is.
$25,000 – Property Damage Limit – This is the amount of coverage in place to cover property damage caused by you to the other car, house, fence, building, etc…. Yes…… Once again, if you hit a Mercedes Benz you will be forking over additional cash to pay for the damages you caused.
In Texas, there are several alternative options for liability limits other than state minimum.
50/100/50, 50/100/100, 100/300/50, 100/300/100, 250/500/100, etc.
Comprehensive Coverage is defined as anything (Other Than Collision). Example: Flooding, Animals, Theft, Falling Debris, etc. This would provide coverage once the deductible has been met.
Collision Coverage provides coverage for losses occurring as a result of collision with another vehicle and/or object. Similar to Comprehensive, this coverage has a deductible as well.
Additional Coverages worth noting are: Uninsured Motorists, Underinsured Motorists, Personal Injury Protection, Rental, Roadside, and GAP Coverage. We will discuss these in great detail in a later blog…… Stay Tuned! However, don’t hesitate to call one of our agents if you’d like more information about these additions today!
Given, we have an understanding of what “basic” auto insurance entails we can look at the difference between Liability Only & Liability on Steroids. There is a difference between Liability on Steroids and Full Coverage…. You can have full coverage and NOT have full coverage…. Liability on Steroids is just basic “Liability, Comp & Collision”… However, Full Coverage is so much more than that! More to come on full coverage in later blogs…. STAY TUNED!
Insurance is an investment product. It’s an investment in the security of your future…. If you view it as an annoying expense you could calculate this decision incorrectly.
Bottom Line….. If your car was totaled could you replace it with cash on hand RIGHT NOW??
THERE’S YOUR ACTUAL VALUE!
CMI of Texas Team!