17 Jun Good Hands, Good Neighbors, Good Grief! What insurance should I have?

Many clients ask us, “What is the minimum insurance that I need to have?” While well-intentioned, the question itself is wrong. The better question is, “What insurance should I have?” Unfortunately, too many clients wait until after the car or motorcycle accident to ask it. Of course, it is then too late.

Car insurance is complicated, as it not just one type of insurance, but several types which are typically packaged together. The first of the policies is liability coverage which is designed to protect the owner or driver of the vehicle from being sued if he or she causes an accident (or from allegations of causing an accident). The minimum amount of coverage under Kentucky law is $25,000. However, this amount has not been changed in decades. Given inflation and the increase in health costs over the past 30 years, purchasing only the minimums is unwise. For example, the average new car cost in 1975 was only $4,250, while today it is more than $30,000. Health care costs have risen even more dramatically. While the minimum coverage was reasonable when the law was enacted, it is does not provide real protection for a driver in the modern era.

In addition to the liability coverage, a Kentucky policy contains Personal Injury Protection. This is sometimes called PIP coverage and is mandatory under KY law. PIP coverage is no-fault and is designed to protect the individuals riding in the vehicle. It also provides coverage to pedestrians and those on bicycles. The amount of basic coverage is $10,000; however, additional coverage is available, as are modifications to deductibles. Given its low cost and the fact that it provides coverage to family and friends riding in the insured’s vehicle, it is a excellent buy for those shopping for insurance. The PIP coverage may be used for medical bills, lost wages, and “out of pocket” damages. Additionally, policies for motorcycles do not require PIP coverage; however, every motorcycle owner or rider should buy it. It is inexpensive, and the injuries in a motorcycle collision or wreck can be severe.

Finally, most coverage packages will contain provisions for Underinsured or Uninsured Coverage. Collectively, these are known as UM/UIM coverage. They provide benefits if the owner or member of his/her household are hit by a driver who does not have his/her own coverage. The benefits are obvious. The coverage is also some of the most affordable that can be purchased. While the negligent driver should have coverage, a significant number of drivers in KY are not carrying even the minimums — which as stated above are not enough in today’s dollars. (Surprisingly, some states require NO liability coverage at all. For example, anyone who is headed to Florida for Spring Break should be aware that the Sunshine State does not require owners or drivers to have liability coverage. Tourists should pack a new UIM/UM policy with their sunscreen). In short, everyone should ask about the costs of additional UM/UIM coverage and buy all they can afford.