Buying minimum car coverage isn’t the best value

counting moneyHow far will you go to pay less for car insurance?

Drivers who trim insurance costs by choosing the lowest coverage limits available are doing themselves a disservice. Even a numbers-averse liberal arts major like myself can calculate that.

Despite inflation, the minimum coverage limits Washington drivers can buy have remained the same since 1980. Those limits for what’s called “bodily injury” (BI) are $25,000 per person in an accident, $50,000 total for the accident.

Oregon’s minimum coverage limits also are $25k per person, $50k per accident.

In this day and age, $25k/$50k doesn’t go very far. Medical expenses can gobble that up quickly.

Although PEMCO offers minimum-limits policies, we strongly urge customers to buy at least the next tier of coverage, $50k/$100k, if not higher. But getting rock-bottom bargain shoppers to agree to that can be difficult because they assume that since it’s twice as much coverage, it must cost twice as much.

That’s not the case.

All factors being equal, twice the protection costs just 18% more for bodily injury coverage. So if you buy $50k/$100k coverage instead of $25k/$50k, you don’t pay 100% more. You pay only 18% more.

Unfortunately, my family has experience with severe car crashes. We saw firsthand how quickly medical costs add up in a BI claim. The cost of replacing even a new, totaled car pales in comparison.

young man holding neck after car accident

​Give that some thought when you choose your coverage limits. Because my wife and I are homeowners with assets to lose if we ever were ruled at-fault in a BI crash, we opted for the highest coverage limits. What’s more, when our kids reached driving age, we bought an Umbrella policy to add an extra $1 million layer of coverage.

You never know what type of havoc a novice teenage driver might accidentally cause. And if you or a family member are legally liable for causing bodily injury to another person, bodily injury coverage takes care of the cost. Umbrella policies boost those coverage limits even higher.

Some states have higher minimum-coverage requirements than Washington and Oregon, while some have lower minimums. What’s key is, legal requirements aside, you should buy enough coverage to ensure you and your family are adequately protected.

If you’re ever in an injury accident, you don’t want to find yourself penny-wise but pound-foolish.

Brenda Munro

03/06/2017 10:01 AM

I have been a Pemco customer for over 40 years.   I haven't used my insurance often but when I needed Pemco (Home or Auto) you have been there for me.  I am on a very limited income now that I am older and will have to reduce my coverage as soon as I make my final payment..  I don't drive much anymore but need to keep coverage..  For me the higher coverage is expensive now.  That would  be the reason for changing coverage.    Love Pemco

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