As personal injury attorneys that focus on auto accidents, we are often asked: “How much insurance is enough?” The answer to this is always: “It depends on what you have to lose.” Generally, if you own your home, or have significant personal assets or wealth, then you want to have more coverage.
First, it is important to distinguish between the types of coverage available in California in order to know what suits your specific needs. Auto insurers offer policies that cover liability only (to cover the losses, damage or injury, you cause to others), and they also offer “Full” coverage.
Full coverage encompasses a few different types of coverage, including: Collision, Comprehensive, Medical Payments, Underinsured Motorist and Uninsured Motorist. Collision takes care of your vehicle in case of an accident where you are not at fault. Your insurance company will help you get your car fixed, and you only have to pay your deductible. If the insurance company is able to recover the costs of repair from the responsible party (or their insurance company) you will be reimbursed your deductible. Comprehensive covers damage to your car in “no fault” situations, such as a tree branch falling on your car, or damage from a hail storm. You will need to pay your deductible and then your insurance company will cover the cost of repair.
Medical Payments coverage can pay for medical treatment after an accident. Generally, this type of coverage ranges from $500 to $10,000, and is meant to cover the cost of emergency room care, ambulance services and any other medical treatment related to an auto accident. This coverage is only available to the driver and passengers in your vehicle. This will supplement your or your passengers' health insurance. Medical payments coverage is not essential to have if you have good health care coverage. If you do not have good health care coverage, then you may wish to consider medical payments coverage.
Underinsured & Uninsured Motorist coverage is extremely important to carry. These two will cover you and your passengers when the at-fault party does not have insurance or does not have enough insurance to cover the losses sustained by everyone. Some policies will extend this coverage to include accidents where you are a passenger in someone else's vehicle who does not have that coverage. Additionally, some policies will even provide that same coverage to your household members when they are passengers in or driving their own or another vehicle.
So when clients ask us how much insurance is enough, we recommend that individuals generally should have at least $100,000/$300,000 policies for Liability, Underinsured and Uninsured Motorist coverage. These amounts will ensure that your passengers in your own car are covered in case you are at fault for an accident, as well as provide enough coverage to protect you if you are not at-fault and the at-fault driver does not have enough insurance. If you own a home, you should check your homeowner's policy to confirm you have “umbrella” or “excess” liability coverage as well.
We also recommend carrying comprehensive insurance with a $100 deductible or no deductible, and collision with a $500 deductible or less. This makes getting your car fixed after an accident much easier and quicker.