Getting into an accident can be frightening. Getting into an accident with an expensive car can be even more frightening. Today, we’re explaining everything you need to know about hitting an expensive car, including your options, liability limits, and insurance coverage.
How Much Car Insurance Do You Have?
Many insurance experts recommend buying at least $1 million to $2 million of car insurance liability coverage. When you have this much coverage, you’re protected against virtually any incident with any vehicle and any driver.
Unfortunately, many drivers do not have $1 to $2 million of car insurance coverage. Instead, many drivers maintain minimum liability car insurance plans. They have the lowest level of car insurance coverage legally required to drive on roads in their state. Sometimes, this amount is as little as $30,000 or $50,000.
If you have a minimum liability car insurance plan, then there’s nothing wrong with that plan – until you get into an accident. Once you get into an accident, your coverage limits will quickly be used up.
This is particularly true if you get into an accident with an expensive car. Even minor injuries and minor damage can quickly exceed your coverage limits.
An Accident With an Expensive Car Can Quickly Exceed Low Liability Coverage Limits
Let’s say you have $50,000 of property damage coverage per accident. You get into a serious accident with an F-150. The car, which has a value of around $40,000, is totaled. Your car insurance covers the $40,000 payout because it’s within your coverage limits.
Or, let’s say you collide with a $20,000 Honda Civic. The passenger door is completely wrecked. The car requires $5,000 of repairs at an auto body shop. Your car insurance covers the payout because it’s within your policy limits.
Now, think of what might happen when you get into the same accident with a $250,000 Bentley or a $100,000 Porsche. Even in a minor accident, the damage can quickly exceed your coverage limits.
If you total an expensive vehicle, then you could be in even more trouble. A serious accident with an expensive vehicle might total a $250,000 car. That means the cost of repairing the vehicle is more than the value of the vehicle.
In this situation, your car insurance company will happily provide payment up to your coverage limits. They might send a check for $50,000, for example. This maxes out your liability coverage. If the total damage exceeds $250,000, however, then you’ll be required to pay the remaining $200,000 out of pocket.
What Happens If I Don’t Have Enough Money?
In the above situation, you caused $250,000 in damage to an expensive car. Your car insurance company pays the initial $50,000 and then walks away, leaving you to face the other driver’s insurance company.
The other driver’s insurance company will ask you to pay the remaining $200,000 in unpaid damages out of pocket.
Most people can’t afford to pay $200,000 out of pocket. Most people don’t have $200,000 in cash lying around. So what happens in this situation? What happens if you don’t have enough money?
In this situation, the other driver’s car insurance company could ask to have your wages garnished. They could also request a judge to order your assets seized to repay the unpaid amount.
Medical Costs Can Quickly Exceed your Coverage Limits
Everything mentioned above focuses exclusively on property damage: you damaged an expensive vehicle and now need to pay for damages to that vehicle.
Medical expenses, however, can blow through your coverage limits just as quickly – regardless of whether you hit an expensive car or a basic car.
In many cases, the property damage caused by hitting an expensive car pales in comparison to the medical costs. You might cause $200,000 in damage to a supercar. If your actions harmed the passengers inside, however, then you might be on the hook for significant medical expenses.
All states require you to have a certain minimum amount of bodily injury damage liability on your car insurance policy. In many states, however, this amount is too low to cover any serious injuries. Many states require you to have just $15,000 of bodily injury liability coverage per person, for example, and $30,000 total per accident.
If you get into an accident with an expensive car, then the other driver and passengers might be seriously injured. Even minor injuries can lead to tens of thousands of dollars of medical expenses. A serious injury can lead to millions of dollars of medical expenses.
People with Expensive Cars Tend to Have Good Lawyers
If you hit an expensive car, then your car insurance company will cover damage and medical expenses up to the limits of your policy.
Once your car insurance policy has been maxed out, however, there could still be expenses to pay. In this situation, the other driver might sue you.
Unfortunately for you, the people who drive expensive cars also tend to have expensive lawyers. These lawyers can sue you, attempt to seize your assets, and even garnish your wages for the rest of your life.
Conclusion: Consider Increasing your Car Insurance Limits
You don’t have to hit a Ferrari or Bentley to exceed your car insurance coverage limits. Approximately 10% of cars on roads in the United States are worth more than $50,000. Even a mid-range truck or SUV can be considered an expensive car.
Consider increasing your coverage limits to cover all situations. Maintaining the lowest possible amount of liability coverage can save you money today. It takes just one accident with an expensive car, however, to exceed your car insurance coverage limits and leave you with serious financial problems.