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© 2020 by Ross Nesbit Agencies

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Personal Insurance Limits: Some Much Needed Context

Auto accidents are a huge cause of concern for drivers, both in terms of financial security and health. Your car is likely to be one of the most valuable things that you own, so making sure it is adequately protected is an essential part of ownership. Likewise, protecting your health in the event of an accident is equally (if not more) important.

For many drivers—especially new drivers and first-car purchasers—it can be particularly difficult to understand the importance of insurance limits and how to use those limits as a quick check to compare price quotes. Costs related to an auto accident can escalate very quickly, especially if an injury has occurred. Everyone has to have insurance; that is not up for debate. Getting the right insurance is a whole other matter entirely.

Understanding what is on a policy can be confusing. To further compound this issue, there are a number of common terms that come up with personal insurance which are misunderstood, including the following:

· Limit – This is the amount that an insurance company will pay for a loss (i.e., a covered loss).

· Deductible – This is the amount that a policyholder has agreed to pay prior to the loss being covered by an insurance company.

· Personal Injury Protection (PIP) – Coverage for potential medical expenses for injuries incurred during accidents, regardless of fault. This could include funeral costs, costs for household services, and funeral costs. Varies from state to state.

· No-Fault Insurance – Another term used for personal injury protection.

· Comprehensive – This type of coverage is for damage done to your vehicle which was not caused by a collision or other event. This could include contact with animals, vandalism, weather events, or theft.

· Collision – This type of coverage is for damage done to your vehicle which was caused by a collision with another object or vehicle.

· Uninsured/Underinsured Motorists – This is coverage for damage to your vehicle resulting from an accident caused by someone who was not insured or who does not carry enough insurance to cover the damages they caused. Insurance of this kind varies between states.

Complicated? Yes and no. Once you understand the terminology being used, it can make a whole lot more sense when you are comparing rates or different policies. Even so, it’s important to work with an insurance professional to find the policies which will benefit your situation the most.

For more information or to review your current policies, contact Nesbit Agencies at 952-941-9418 or info@nesbitagencies.com.