A Text and a Wreck Cost Me What???

Mark Hume |

Do you know how much auto insurance coverage you have? 

Do you only have the minimum required liability or do you have maximum protection?  What about an umbrella policy for any spill-over costs from an accident?

Do you have a young son or daughter who just started driving or will start soon?

Most people cannot rattle these insurance limits off from memory, and that’s ok.  But if you haven’t reviewed these details in some time with an expert, it could really be beneficial should you find yourself in a few unfortunate scenarios that could wind up costing you big-time.  Let’s consider a couple of examples.

Scenario One:

Let’s start with that brand new 16-year-old driver.  He is excited to be out on the streets for the first time and decides he needs a selfie of himself behind the wheel for an Instagram post.  Unfortunately, he doesn’t notice that traffic up ahead has stopped and he slams into the back of a vehicle.  Even more unfortunate is the fact that he has slammed into a brand-new Mercedes S560 convertible.  And this thing is loaded. 

The car is totaled! Do you know the price tag of that car when it rolled off the showroom floor three weeks ago?  The lady who purchased it was a fierce negotiator and got the salesperson all the way down to $150,000.  

What is your Property Damage Liability Limit?  What does it mean if it only says $75,000 on the declaration pages?  Well if you don’t have an umbrella policy, then you would be on the hook for half of the price to purchase a new S560 to replace the one your child totaled. Ouch!

Scenario Two:

That same 16-year-old driver is out with three friends on a Friday night.  Two are playing Fortnite, and one is on Snapchat.  The buddy on Snapchat describes a Snap as “unbelievable,” and your 16-year-old just has to take a look for himself.  It cannot wait.

He pulls his phone out of his pocket and quickly becomes distracted with the video his friend reacted to.  Seconds later there is an accident, and everyone has sustained injuries.  These injuries generate medical bills that are well beyond the scope of medical payments covered under your policy.  Additionally, you are subject to a lawsuit by each of the passenger's parents.  How much could this cost?  It is hard to say.  Millions could be in play, but that umbrella policy we discussed earlier could really come in handy in a difficult situation like this. 

Adults struggle with these distractions as well.  Many adults cannot resist the urge to text and sometimes that causes a wreck.  These same damages in the examples above could apply to you the parent as well. 

Most people don’t know what level of protection they have, what monetary level of liability their insurance can sustain, or how that would affect them financially.  While it’s not an exciting topic to deal with, reviewing the declaration pages of your property & casualty insurance with your financial adviser or an objective insurance broker can help financially protect you and your family from some catastrophic events that could potentially cause bankruptcy.  There’s just no need for that when there is a simple and affordable solution.  Please make sure to take some time and confirm that you have adequate protection from catastrophic events that could occur in your life.

-Mark Hume