The auto insurance limits in your policy are important to understand, because they protect you from risk. However, deciphering a policy can be daunting.
What Do The Terms Mean?
In Rhode Island, the person who legally caused the accident is responsible for damages or injuries. If someone suffers injuries or property damage, they can seek compensation. They can file a claim with their insurance carrier, file a claim with the insurance company of the at-fault driver, or file a lawsuit.
Your Rhode Island auto insurance policy should cover your particular needs. Here are some of the key features commonly found in policies and what each covers.
As the name suggests, this insurance protects you if your vehicle is damaged in an actual car accident. It doesn’t matter whether you or the other driver caused it. If you have collision coverage on your vehicle, your insurance company pays to repair or replace your vehicle, minus your deductible. If your car is deemed to be a “Total Loss” (not repairable or too costly to repair), the company will pay you the actual cash value of your car, minus your deductible.
Comprehensive insurance covers damage to your vehicle caused by anything other than collision. This includes things like hail storms, flooding, trees falling on your car, vandalism, rocks cracking your windshield, or even total theft of your car.
If you’re in an accident and sustain injuries, this insurance provides limited coverage for associated medical expenses for you and your passenger.
Bodily Injury & Property Damage Liability Coverage
If you injure a person or damage their property during an accident, the insurance company will step in to cover the associated costs that you are legally liable for. The insurance company will reimburse the person you hit for their medicals bills, vehicle repairs, or repairs to other property you damaged such as a building, fence, mailbox, or even a telephone pole. In Rhode Island, this coverage is mandatory.
Uninsured & Underinsured Motorists Liability Coverage
If you’re involved in an accident and the person at fault does not have insurance or sufficient liability coverage, your insurance company pays you for damages since the other driver cannot. In Rhode Island there are two different uninsured/underinsured motorist coverages, uninsured motorist bodily injury and uninsured motorist property damage.
Rhode Island requires that every car insurance policy sold in the state offer uninsured/underinsured motorist coverage (UIM). It covers both uninsured drivers and underinsured drivers, and you must opt out in writing if you do not want it.
Does Minimum Coverage Protect You?
Rhode Island uses the tort system when settling losses caused by auto accidents. Under this system, you buy “liability” insurance that protects other drivers if you become legally responsible for injury or other damage caused by an accident. The insurance company steps in to pay for your damages.
The Rhode Island minimums are 25/50/25 liability coverage.
- The first number refers to $25,000 maximum coverage for bodily injury (per person) hurt in an auto accident.
- The second number is a $50,000 cap on the total bodily injury liability coverage per accident if more than one person is injured.
- The third number is a $25,000 maximum for property damage liability.
Let’s examine these minimums for a moment.
If you’re in an accident and someone gets hurt, how far do you think $25,000 will go to cover medical expenses? Surgery on a broken arm could cost $16,000, or more. This doesn’t include doctor’s fees, x-rays, medications, or a cast. If the injuries are serious, they could reach $100,000 quickly, especially if someone is hospitalized as a result of the accident
What if multiple people are injured? Would $50,000 cover medical care for everyone? What if you lost control, left the roadway, and plowed into someone’s home? Would $25,000 pay for their fence, lawn and home repairs? The state required minimums do not offer adequate protection!
How Much Coverage Should You Have?
Drivers buy insurance to protect themselves from physical and financial risk. If you’re in a major accident, it could cost you hundreds of thousands, if not more. Proper coverage protects you and your assets.
State minimum coverage limits for liability are too low to protect the assets of most motorists. Most motorists need at least $100,000 per person, $300,000 per accident. The state minimum for property damage is $25,000. However, the cost of a new car averages $30,000 and if you hit a home or building, you will need even more. You should have at least $100,000 in property damage coverage. These limits would be the minimum we recommend for someone with minimal assets. If you own property, have money in savings, retirement funds, investments, etc you should consider further increasing your liability limits.
If you think that you’re driving with minimum coverage, give us a call. Without proper coverage, you’re liable for everything beyond the 25/50/25 limits.