How Much Auto Insurance Coverage Do I Need?

PLEASE NOTE: This article is not intended to be legal advice, and is no substitute for speaking with a licensed attorney. If you have been injured in a motor vehicle accident and have questions, please contact an attorney. You can reach our office at (360) 733-3966.

After a major car accident, having enough insurance coverage can mean preventing the loss of your home or business or protecting your family from bankruptcy. As a personal injury law firm handling numerous car accident and catastrophic injury cases, we spend a lot of time working with auto insurance companies, and people often ask whether they have enough insurance coverage. Unfortunately, we also frequently encounter situations where someone realizes too late, after a major accident, that his or her insurance coverage was insufficient. Thus, we strongly recommend that you take a moment to review your auto insurance policy to be sure that you and your family are adequately protected.

The minimum amount of coverage required by law in Washington State is $25,000 per person and $50,000 per incident for injuries to others, and $10,000 per incident for damage to the property of others. This is referred to as “liability” coverage, and is the absolute bare minimum. This does not include supplemental and often very important types of coverage such as Under-Insured Motorist coverage (UIM) or Personal Injury Protection coverage (PIP). Of course, $25,000 is a lot of money, so it may seem silly to call it “minimal.” But when you get behind the wheel of a fast-moving, 5,000-pound vehicle, even the slightest error (by you or someone else) can have catastrophic consequences reaching into the hundreds of thousands or even millions of dollars.

You can find the details of your coverage on the “disclosures” page of your auto insurance policy. If you do not recognize that term or do not have a copy of your policy handy, ask your insurance company or local insurance agent for a copy. The three most important things to look for are:

(1) The amount (also referred to as the “policy limits”) of your “Liability” insurance coverage. This is what protects you if you make a mistake on the road and cause an accident. We all make mistakes, and plenty of good people have fallen asleep at the wheel, failed to see a red light, or simply thought it was safe to change lanes or turn when it was not. If someone else is seriously injured or even killed as a result, that person or his or her family has a right to sue you for damages (medical bills, lost wages, pain and suffering, etc.). In cases of death or catastrophic injuries, those damages could amount to millions of dollars. If you only carry $25,000 in liability insurance, your insurance company will simply write the injured person or his or her family a check for $25,000, and you will be on the hook for the rest. That could mean losing your savings, your house, or your business. It could mean bankruptcy for your family. Carrying additional coverage to protect your assets and your family may not cost as much as you think. Generally, consumers pay the largest part of their insurance premiums for that first $25,000/$50,000 (bodily injury) and $10,000 (property damage) in liability coverage. Additional coverage costs proportionally less in premiums as your coverage increases. We recommend carrying at least $300,000/$600,000 in liability coverage for bodily injury to third parties, and $500,000/$1,000,000 or more if you can afford it. If you ever need it, it could very well be the difference between keeping or losing everything you have worked hard for. At the very least, it is worth looking into what it would cost to have that added protection for you and your family.

(2) Whether you have Under-Insured Motorist (UIM) coverage and the amount/policy limits of that coverage. Under-Insured Motorist coverage, or “UIM,” is what allows you to recover money if you are seriously injured by someone without insurance, or, just as importantly, someone without enough insurance. Many people think of “UIM” as “uninsured” motorist coverage, but the “under-insured” part is just as important. If you are catastrophically injured due to someone else’s error on the road, you may have hundreds of thousands of dollars in medical bills and be unable to work to support your family. But if the person who caused the accident has only the minimum $25,000/$50,000 in liability coverage for bodily injury, a check for $25,000 will barely make a dent in your needs and expenses. You will want to be able to make a claim with your own UIM coverage. UIM coverage is not required in Washington, but it is essential. We strongly recommend carrying at least $300,000 in UIM coverage, and $500,000 or more if you can afford it. We sincerely hope that you never need to use it, but again, if you do need it, it could make all the difference for you and your family.

(3) Whether you have Personal Injury Protection (PIP) coverage and the amount/policy limits of that coverage. Personal Injury Protection coverage, or “PIP,” is also called “no-fault” medical coverage. It pays your medical bills after an accident, regardless of who was at fault for the accident. It is often important because, if you are injured in an accident caused by someone else, it prevents you from having to pay out of your own pocket up front for your medical expenses. A good personal injury attorney will be able to recover your medical expenses (along with money for your pain and suffering, lost income, and other damages), but a settlement or verdict may take a significant amount of time. In the meantime, if you do not have PIP, and particularly if you do not have good health insurance coverage, you may be stuck paying your medical bills (or large deductibles or co-pays) and waiting to be reimbursed. PIP helps you avoid that situation. PIP will pay your medical bills on an ongoing basis while your attorney works to recover money from the at-fault party, his or her insurance company, or your UIM carrier. PIP policies are generally $10,000 per person or $30,000 per person, and are surprisingly inexpensive. We recommend $30,000 if you can afford it, but even a $10,000 PIP policy is a very good thing to have and generally will not add too much to your insurance premiums.

Again, we hope that you stay safe on the road and never need to use your auto insurance. But accidents do happen, so it is always best to be prepared. If you have questions about your auto insurance coverage, your local insurance agent is a good place to start. And if you or someone you love has been injured in an auto accident, a good personal injury attorney can protect your rights and recover fair compensation for you. Safe travels.