On April 8th, a car in Montgomery, Alabama gave a new meaning to the phrase “drive-thru” as it crashed into a restaurant’s dining room. According to the police, the driver of the SUV mistakenly accelerated, causing it to crash into the restaurant’s wall.
While there were no reported injuries, there were damages sustained by the vehicle, and of course, the restaurant. When accidents like this happen in Chicago, having adequate auto insurance comes in handy.
Many drivers worry about being underinsured, as they should. However, being over-insured can be a problem, too. This means you’re paying high premiums every month, a portion of which is for coverage you won’t likely use.
What’s Wrong with Being Over-Insured?
Let’s be clear: it’s better for your car to be over-insured than underinsured. If your car is underinsured and you get into a collision with another vehicle full of passengers who have sustained injuries, you’re liable for thousands of dollars in medical expenses. Being underinsured and having to pay for such damages can be financially crippling.
If you’re over-insured, you’re likely to have more coverage, even for circumstances you didn’t think would happen. The downside, though, is that the monthly premiums that you’re paying are likely to be too high.
How Do I Know If I’m Over-Insuring My Car?
In the state of Illinois, you’re required to carry at least $25,000 worth of bodily injury liability coverage per person and $20,000 worth of property damage liability coverage.
If, for example, you’re paying for $300,000 worth of bodily injury coverage and $250,000 worth of property damage coverage, you’re paying way too much.
However, you should still consider the following:
- Meeting the minimum car insurance requirements does not mean you’re adequately insured. In fact, insurers will see this as being underinsured. In Illinois for example, a $20,000 property damage liability coverage isn’t enough if you collide with a high-end vehicle. The repairs alone will quickly eat up your coverage. After it’s all used up, you’ll have to pay out-of-pocket.
- If you have adequate health and life insurance, you may not need a huge car insurance coverage. Generally, your car insurance coverage is the first to be used up if you are involved in a vehicular accident. Then, you may use your health and life insurance policies to pay for medical bills, if applicable. One extension of car insurance policies is Personal Injury Protection (PIP) coverage, which covers your medical expenses, regardless of who is at fault. If you avail of this with your car insurance policy, and you also have life and health insurance policies, you need only take out the minimum PIP coverage.
- You may be paying higher premiums for other items in your insurance policy that you don’t really need. For example, if you’re already a member of the AAA or something similar, you don’t need to add towing and roadside assistance to the premiums you’re paying.
How Should You Decide on How Much Insurance Premiums to Pay?
While being over-insured has both advantages and disadvantages, whether it’s a good idea for you depends on your lifestyle and financial situation. If you can afford to pay damages out of pocket, you may be able to get by paying for the minimum insurance coverage.
Then again, you may find paying for higher monthly premiums that cover more damages a better option. Compared to out of pocket costs, this alternative could prove way more affordable, after all.
For more reliable car insurance information and tips, visit Oxford Auto Insurance today.