What You Should Know About Auto Insurance

Why should I buy auto insurance?

You buy auto insurance to protect yourself, your family and your assets. Auto insurance policies include several types of protection. The liability portion of auto insurance pays for injuries or damages you cause, including to passengers in your car. Other coverages pay for damage to your car and to protect you in case you have an accident with someone who has too little or no insurance. Nearly all policies also require that company to defend you if a claim is made against you.

Do I have to buy auto insurance?

In Wisconsin, you are not required to buy liability insurance. However, our financial responsibility law requires licensed drivers to have insurance or enough money to pay for damages they cause. If you cause an accident, do not have insurance, and cannot pay for the damages, your driver's license can be suspended. You are then required to pay the damages and buy insurance before your license is reinstated.

If you buy insurance, the minimum insurance coverage required is $25,000 for the injury or death of one person, $50,000 for injury or death to two or more persons, and $10,000 for property damage. Uninsured motorist coverage is also required at the same limits. This type of coverage is provided automatically with liability insurance and protects you if you are involved in a car accident with a driver who has no insurance. Underinsured motorist coverage must be offered to you in the minimum amount of $50,000. This type of coverage protects you if you are involved in a traffic accident with a driver who does not carry enough insurance to cover all of your damages.

What is the "right" insurance?

The minimum amount of coverage may not be sufficient to cover damages caused in an accident or to protect your assets. The "right" amount of insurance depends on the level of your personal assets which require protection.

In most cases, you should buy the highest level of coverage you can comfortably afford. Compare premiums for different levels of coverage. Rates for higher levels are not much greater than lower levels of coverage (the premium for $100,000 of coverage is not double the premium for $50,000).

It is recommended that all persons carry liability insurance coverage at least in the amount of $100,000/ $300,000/ $50,000. This means your liability insurance pays up to $100,000 for injuries to one person, $300,000 for all persons, and $50,000 for property damage. Some policies, although not many, are written as single limit policies under which the total paid out is limited. In this case, a single limit coverage of $300,000 is recommended.

Because serious injuries can result in high medical bills and other costs, you need adequate coverage. You could be held responsible for expenses in excess of your liability insurance coverage. If you have substantial assets, you should consider purchasing an umbrella policy.