In an effort to answer some of the most frequently asked questions posed to our agents and agency, we’d like to introduce a new feature here at the Ludovissy and Associates blog, Ask Agent Ann.
Ann is our Personal Lines Manager and graciously agreed to field some questions for us.
First up is a question about liability limits.
Why would I carry higher liability limits than the minimum required by state law?
Every state is different but let us take a look at Iowa Requirements. Iowa law has a minimum of 20/40/15 for liability limits.
What does this even mean?
The first two numbers 20/40 are associates with your bodily injury coverage.
- The first number, 20, is the limit covered per person in an accident. $20,000
- The second number, 40, is a total limit covered if 2 or more people are hurt in an accident. $40,000
The third number 15 is associated with property damage caused by you in the accident.
- $15,000 for damage to another vehicle or any property you may hit with your vehicle while in an accident.
Is this enough coverage?
Lets use an example… See Dick and Sally get into an Accident
Sally has state minimum liability coverage, 20/40/15 on her 1989 Chevy Cavalier.
Dick is driving his son and daughter to school in his 2014 BMW 3 Series which he just purchased for $49,500.
Sally just received a text and looked down at her phone, she did not notice the light change to red as she barreled through the intersection and hit Dick’s BMW while traveling 35 mph. Dick’s BMW is totaled, he and his two children are air lifted to Iowa City hospitals where they are treated and released after spending a week in and out of surgery and recovery and the next few months in rehabilitation. Total cost of hospital bills are currently over 75,000 per person with a running total of $225,000.
Sally’s insurance will only pay $40,000 for the medical bills and only $15,000 to replace the BMW. At this time Sally will be personally responsible for the accidents’ remaining balance of $219,500.
So again do you ask … “Is this enough coverage?“
Please give our agency a call to review your current liability limits and see really how inexpensive it is to make sure you are protected in the case of an accident. Also ask about Uninsured and Underinsured Liability Limits to make sure you are protected from all the Sallys of the world.
Have a question for Agent Ann? Leave your question in the comments and if we use it in an upcoming post we’ll send you a t-shirt!