INSURANCE GUIDE
car insurance specifics
Learn about the specifics of car insurance.

Americans own more cars per capita than any other country around in the globe, which means this is a good place to study car insurance and learn about how everything works when it comes to insuring vehicles. While everyone loves the idea of using their car to drive to work in a matter of minutes instead of walking for hours, the reality is that these vehicles are still rather dangerous. Accidents are always going to happen while humans are behind the wheel, and these accidents can end up being rather expensive in certain situations. Driving a car can lead to major medical expenses or major property damage, so it is important to make sure that you are insured for your own damages and the damages of the cars you run into on the road when it is your fault. For most people, putting together the right kind of car insurance plan is actually going to be a rather simple task.

Reduce Your Risk of a Lawsuit

Most people look at insurance as the only way to improve their standing in a situation where they could be sued after getting involved in a traffic accident, but the reality is that there are many other measures that you can take to avoid these kinds of major legal troubles. Here are some of the main things that you should do if you want to lower your overall lawsuit risks:

  • The first thing you need to do is make sure that you are following the traffic laws. People who drive above the speed limit or do not pay attention to the laws of the roads tend to get into more accidents than those who pay attention to traffic laws. Anyone who has a speeding ticket or the past two years nearly doubles their chances of getting into an accident if they do not make some changes to their driving habits in the near future. If you are someone who has received multiple tickets for traffic violations over the past two years, then you are almost three times as likely to get into an accident. The moral of the story is that speed kills when you are on the road. These kinds of numbers should help you understand the importance of following the rules while you are on the road.
  • Never drink and drive. This is something that everyone is told from a young age, but the reality of this fact does not sink into everyone’s brain. You should always use a designated driver if you know that you are going somewhere where alcohol will be consumed. You definitely increase your chances of getting into an accident if you drive while you are drunk, and the legal problems associated with getting caught in a drunk driving situation are not something that you want to face anytime soon. You also have to think about the dramatic increase on your car insurance costs if you get a DUI.
  • Regular maintenance on your vehicle can be used to make sure that your car does not cause an accident. Even the safest drivers can get into accidents when their cars are not acting properly, so make sure that your car is inspected by an actual mechanic on a regular basis. You should only trust yourself to check your car if you are someone who has a long history of working on cars.
  • Get a car that comes with high safety ratings. For the most part, you will not be able to prevent an accident from happening while you are on the road. Sometimes you will not be at fault for an accident, so it is always best to drive a car that will not be completely destroyed after a low-speed collision. You can actually lower your insurance costs if you purchase a vehicle that gets a high rating on the Insurance Institute for Highway Safety Web Site. You should always check this website before you purchase a new or used car.
  • Take a defensive driving class. The best way to make sure that you never get into an accident is to take more driving classes than you actually need. When you know more about the dangers that people run into on the road, you will be able to do a much better job to avoid an accident when you face those dangers in your own life.
  • If you are new to driving, then you need to make sure that you get a lot of practice. The catch here is that the best way to practice driving is to get on the road and actually push yourself to drive in uncomfortable situations. Try to get yourself acclimated to driving in many different locations and weather conditions to make sure that you are always comfortable when you are behind the wheel. When you are cool, calm, and collected on the road, there is a greater chance that you will be able to avoid any kind of accident in the future.
  • Only let your teen get their license and drive a car if you believe that they are responsible. The reality of the current driving age is that it is actually quite low. Some sixteen year old kids are simply not ready for the responsibility of getting behind the wheel, so it is important to make sure that you understand the maturity level of your teen before you give them the keys to the car. Responsible teens are more likely to avoid any accidents, which is why insurance companies give discounts to teens who get good grades in school.

Liabilities and Being Susceptible to a Lawsuit

Liability insurance is a very important aspect of car insurance because this is the kind of insurance that will protect you against paying for someone else’s damages. When an accident is your fault, your insurance is usually going to need to cover the costs of a person’s injuries or car damage. You need to make sure that you get plenty of coverage when it comes to liability insurance because these costs can definitely add up over time. This is especially true when it comes to accidents that involve more than two cars. In most situations, you should try to purchase around $100,000 of liability insurance as an additional aspect of your car insurance.

When someone is thinking about cashing in on your liability insurance in an accident that is definitely your fault, they are going to need to think about whether you are actually worth suing in the first place. One of the main reasons that young people usually do not get sued for an accident that they caused on the road is that they do not usually have assets to actually be sued for in these situations. Most young people can barely afford to have a car to drive on the road, so it’s not like the counter party has much to gain from taking them to court.

Having said all that, it is important to look at the factors that go into whether or not someone will be sued. There is not really anything that you can do to stop yourself from being sued in certain situations because the basic fact of the matter is that people who are richer are more likely to get sued. The only way to lower your probability of getting sued would be to lower your income or get rid of a lot of your assets, and that probably would not be worth it in the long run.

The main thing that people are going to look at when it comes to whether or not you will be sued is your income. If you make good money on a yearly basis, then you are more likely to be able to give someone a large chunk of cash for the damages that you brought their way. Another thing to think about here is that people may also be willing to sue you for your future income. Even if you are a starving medical student right now, the reality is that you are probably going to be making some good money in the future. Whether you are an MBA student or a medical intern, you can be sued for your future income if the court decides that an accident on the road was definitely your fault.

Another reason that someone may decide to sue you for something that happened on the road is if you have a large amount of assets. Whether it is cars, real estate, stocks, or anything else, it’s important to realize that all of these items are up for grabs if you do not have the cash for a settlement. An attorney is more likely to recommend to their client that they sue you if you have a large amount of stuff that they will be able to take away from you when the lawsuit is over.

One last reason that you could be a solid target for an accident related lawsuit is if you are about to get some kind of large inheritance. If your parents are wealthy, then the attorney on the other side of the courtroom is going to figure that out and try to sue you for all you are about to be worth. This is something that people usually overlook when it comes to getting sued for an auto accident because they are usually focused on their current income level and assets more than anything else.

If you are someone who has a lot to lose by being sued for a traffic accident, then you need to make sure that you have a high limit on your liability insurance. Most people will be happy to take the limit on your insurance policy instead of dragging you through court because they do not want to have to show up at court either. As long as your liability insurance limit is close to what a particular person is owed, they should be fine with simply taking the limit and going home.

How Much Does it Cost to Raise Your Liability Limits?

The good thing about raising your liability insurance limit is that it is usually not going to be that expensive. If your limit is currently set at $100,000, then it would only cost you roughly $100 more per year to increase that limit up to $300,000. Since the cost to increase this limit is rather low, you should try to increase it to basically as high as you can realistically go. You also have to think about how your liability limit compares to your current level of income.

For the most part, you will only need to worry about drastically increasing your liability limit if you are someone who makes a lot of money or has a lot of assets. If you are someone who lives paycheck to paycheck, then the other person will probably not waste their time trying to sue you for damages. For the average person, $100,000 of liability insurance is going to be all they need. Anyone who makes six figures or more per year may want to think about increasing the limit attached to their current liability insurance coverage.

Avoiding the Pitfalls of Split-Limit Liability Insurance

Some people think that it makes sense to have different limits for different types of situations that arise from accidents on the road. For example, there are certain insurance policies out there where there will be different limits for a single accident as opposed to the injuries attained by a single individual. It is usually a good idea to use one of the following strategies to make sure that you get the right kind of split-limit coverage for your vehicle:

  • When it comes to insuring yourself against the injuries sustained by a single person, you should try to make sure that it comes with a high limit. While the general liability insurance limit is recommended to be around $100,000, you may want to go as high as $500,000 when it comes to a single person’s injuries. This is a good plan because a single person is more likely to sue when there is a ridiculous amount of money that is needed to take care of their medical costs associated with the accident.
  • Another option is to simply go with one limit that applies to all of the damages that you owe from an accident. If you take this route, you should make sure to purchase a bit of extra coverage. Since all of the costs associated with the accident are going to be covered under one limit, you need to make sure that the limit is able to cover everything from car damages to personal injuries.
  • A third thing to remember when it comes to split-limit liability insurance is that you may also want to get a secondary policy as a backup plan. An umbrella policy will act as a safety net in any situation where an accident causes serious damages of up to $1 million or more.