In a casino, the house always wins. When it comes to insurance, the insurance companies always collect more in premiums than paying out in claims. Otherwise they wouldn’t be in business. Then why do we buy insurance? Other than it is legally required, we want to use predictable and affordable losses (i.e. premium payments) to prevent unpredictable and catastrophic ones that could ruin our lives. When it comes auto insurance, we recommend spending money on the following three “vital coverages“.
- Bodily Injury Liability
If you hit someone, you’d be responsible for the injured person’s medical bills, lost wages, plus pain and suffering. In addition, if sued, you would likely have to pay a hefty legal bill. With so many highly-paid professionals driving in the Bay Area, $50K may not be enough. (The per occurrence coverage is less relevant because most cars on the road have only one person in it.) So we recommend carrying at least $100K-per-person.
- Property Damage Liability
With so many Tesla’s and other luxury cars on the road in the Bay Area, damaging one of them could easily generate a loss of over $50K, costing potentially tens of thousands out of your pocket. So we recommend carrying a $100K coverage. The good news is that doubling this coverage from $50K to $100K cost you almost nothing.
- Uninsured/Underinsured Motorist
1 out of 7 drivers on the road are uninsured. They typically don’t have much asset. Collecting from them could take years. With this coverage, your own insurance pays you immediately if you are hit by an uninsured/underinsured driver. This is a vital yet inexpensive protection for yourself and your family.
All other coverages are merely “convenience”. e.g. Compared with a $1000 deductible, the additional benefit of a $500 deductible is at most $500. The interesting thing is that giving up this $500 benefit in deductible is often more than enough to boost the vital coverages from $15K to $100K. In addition, Medical Payment coverage pretty much overlaps with your regular health insurance coverage. You can remove it to save money.
At SafeButler, your insurance coverages are automatically and continuously reviewed by licensed professionals whose sole objective is to ensure you and your family are well protected, and your insurance dollars are spent wisely.