Reason 1
Today we are inundated with ads for the cheapest car insurance. GEICO promises to save you 15% or more. Others allege the hundreds of dollars you can save with them. What they don’t tell you is the big mistake you make in purchasing the cheapest insurance.
Virginia required a motorist to carry a minimum of $30,000 in liability insurance. That has increased to $50,000, but only if your policy was issued after Jan. 1, 2025. If you buy the cheapest insurance, this is what you will get. In most cases, that will mean that you are significantly under insured.
What the insurance company will not tell you is that $30,000 may be all that you can recover if you are severely injured by the negligent driving of another person. Under Virginia law your insurance company is required to provide you with something called underinsurance coverage. That coverage is different from the uninsured motorist coverage that you are probably familiar with.
If the person that injured you in the wreck has no insurance and you have the minimum coverage then your uninsured motorist coverage can pay you up to the amount of your liability coverage. If your liability coverage is only $30,000 then that is the limit of your uninsured motorist coverage.
However, the underinsured coverage is different. That provides additional coverage for you if the person that hit you in the wreck had less liability coverage than your policy provided to you. For example, if the person that hit you had $30,000 in liability coverage and you had $100,000 in liability coverage, your insurance company would be required to cover your personal injuries up to the limit of $100,000.
Suppose you are in an accident and your hospital bill is $50,000. Considering the cost of medical care these days, that would not be an unusual situation. If the person that caused the wreck only had $30,000 in coverage, then that is all his or her insurance company would be required to pay you. If you only had $30,000 in coverage then, depending on the options you select, your company may get a credit for the $30,000 liability coverage of the person that caused the wreck and you would have no additional coverage to pay your hospital bill. If you had $100,000 in coverage then, depending on the extent of your injuries, your insurance company will be required to pay up to the $100,000 limit of your policy under the underinsured coverage. Your attorney can make a claim for pain and suffering, lost income or wages, and the other damages allowed for personal injury in Virginia that are in addition to the medical bills.
We recommend that no one should carry less than $100,000 in coverage on their auto policy, and preferably $300,000. One reason is that such coverage protects you and provides a possible recovery for you if you have severe injuries and large medical expenses. Once you have paid for the basic required coverage, the cost of increasing your liability/underinsured limits is not significant and is well worth the cost.
The bottom line, never buy the cheapest insurance coverage. You’re not just protecting yourself if you injure another under your liability coverage, but you are also protecting yourself from someone who has the minimum insurance in Virginia.
Reason 2
Today we are inundated with ads for the cheapest car insurance. GEICO promises to save you 15% or more. Others allege the hundreds of dollars you can save with them. What they don’t tell you is the second big mistake you make in purchasing the cheapest insurance.
If you are involved in a wreck and it is claimed that you were at fault in some way then you are subject to being sued for personal injuries and property damage. Your insurance company will provide a lawyer to defend you and provide coverage of the limits of your policy.
In Virginia you’re only required to carry $30,000 of liability coverage, unless you have a policy issued after Jan. 1, 2025 when that goes to $50,000. If you purchase the cheapest car insurance, this is what you are likely to be buying. If the person injured in the wreck who is suing you had a $50,000 hospital bill and is claiming personal injury damages for pain and suffering, lost wages, and other elements included under Virginia law, then you are significantly underinsured.
Your insurance company will never pay more in the liability coverage you have purchased. In the above scenario, your personal assets are subjected to any judgment over $30,000 ($50,000 if policy is after 1/1/25). If you have a house, bank accounts, investments, or other assets, those may have to be liquidated to pay off any claim or judgment above those amounts. If you have a job, your drivers license can be suspended and your wages can be garnished until the judgment against you, with interest, is fully paid.
We recommend that no one should carry less than $100,000 in coverage on their auto policy, and preferably $300,000. One reason is that such coverage protects you if someone else is injured in your auto accident and has large medical expenses. They will also claim damages for pain, suffering, lost wages, etc. Once you have paid for the basic required coverage, the cost of increasing your liability/underinsured limits is not significant, and is well worth the cost.
