Monday, December 24, 2018

How much Auto Insurance do you need?

It is universally true that people never ever consider themselves bad drivers, even if they are so at times. If a car accident occurs, it is always the other person’s fault! California is an at-fault state, which means that the insurance company of the person who has caused the accident is responsible for paying not only the repair costs, but also the medical costs incurred.

Car-owning Californians presume mistakenly that they need only the minimum auto insurance coverage. Even the best of drivers can and do make mistakes that cause accidents. In addition, there can be circumstances beyond anyone’s control, where no person is responsible for an accident.

Image Courtesy: Pexels
Partial protection is never enough

In California, it is illegal to take a car on public roads without insurance coverage. There are very severe penalties for not having one. The minimum coverage limits are $15,000 per person and $30,000 per accident, which satisfies the legal requirements.

However, it is never going to be enough to provide for the kind of protection you need actually, if you are liable for causing the accident, in part or in whole. In California, the payment of medical expenses for accident-related injuries is usually through liability coverage. With medical costs skyrocketing, paying for medical expenses out of your own pocket could bankrupt you.

How much is enough?

Ideally speaking, the more coverage you have, the better it is for you. Of course, there are practical considerations that place a limit on this suggestion. It is not a good idea to pay huge premiums, far more than you can possibly afford.

Coverage of $100,000 per person and $300,000 per accident is very likely to be adequate for most accident claims and costs. With this kind of coverage, you will find yourself well protected from medical and repair costs, if you are liable for causing an accident.

There is yet another factor to take into account: what happens if you sustain serious injuries in the accident? Alternatively, if the injury is caused by a driver who has no insurance or has inadequate coverage? This is where other forms of coverage are important.

Uninsured Motorist Insurance: This insurance will pay for injuries and property damage if the at-fault driver does not have insurance, or if the coverage is not enough to pay for all the costs.

Collision Coverage: This will pay for damage to your vehicle regardless of who is at fault.

Medical Payments Coverage: This will pay for any injuries you may suffer in an accident as well as for that of any passengers in your car. The payment is certain, regardless of who is at fault.

Calculating the types of adequate auto insurance coverage, and how much is required involves a number of factors: road and vehicle related risk factors, the amount a person can afford to pay for insurance, and so on.

Finding the right balance requires the knowledge and experience of a reputed insurance expert. Consult one to ensure that you have full protection, under all circumstances, should you cause an accident.

What is Loss of Use Coverage?

Camp Fire in Northern California and the Woolsey Fire in the southern part have been the most devastating the state has ever seen. While the loss of life is tragic, the plight of those who survived, but lost their homes to the flames should not be forgotten. Most of them will be looking towards their homeowner’s insurance policies to help them rebuild their homes and their lives.  Many of them may be in for a rude shock: they may find disturbing things.

Image Courtesy: Pexels
Rebuilding cost is not enough

Most homeowners plan on their coverage based on the cost of rebuilding their homes – or repairing them if they are lucky enough not to have lost them completely. What they do not take into account is the time it will take to have a home to live in again. It could be months, or even years.

Where will the family live until then? How much will it cost? Can they afford to pay rent for such a long period? There will be many other expenses not covered by insurance after wildfires end.

That it could be a year or more before a home is rebuilt or repaired may seem to be an exaggeration. However, history shows that it is not. After a large residential area is devastated by fire, the contractors who work in the area are overwhelmed with calls. It could be months before any of them is free to take on a project.

In addition, the demand for building supplies and materials will be huge, although shipments to the affected area will be fast. This could cause delays even for those who are lucky to start early the project.

Those who suffered through the 2017 Napa fires have firsthand knowledge to testify to such delays. It will cost a lot of money for a family not only to survive but also to pick up the pieces, while waiting for their home to be ready for occupation.

Loss of use coverage is essential

Loss of use coverage protects your family if you lose the use of your home. A homeowner’s insurance policy that includes loss of use coverage takes care of the living expenses of the occupants of the home until the home is ready for occupation again.

Depending on the coverage that the policy offers, loss of use can include payment of expenses that would not exist if the home had not been lost in the first place. For example, it could cover any extra commuting costs, food expenses etc.

If your homeowner’s insurance policy does not include loss of use coverage, you should act immediately, to modify the policy and provide for this additional and essential protection. If the coverage exists already, it is critical to ensure that it is enough to cover the living expenses when your home is not going to be ready for occupation for a long period.

Calculating how much coverage is required can be rather complex because of the various factors you need to consider. An experienced insurance broker is the best person to guide you through the process and ensure your family’s full protection.

In California, wildfires are no longer seasonal; they are now the new normal.