by Ed Sneineh

Marketers of auto insurance and financial consultants are not in agreement when it comes to  the weight that must to be placed  on liability limits in automobile insurance contracts. Automobile insurance marketers like to emphasize the features of price and the ranking of the insurance companies, while financial consultants like to, initially, center the attention on the magnitude of liability limits, then insurance companies ranking next, and perhaps price at last.

Although financial consultants and car insurance marketers have the collective goals of maximizing their wages while performing their services, the extent of their business is much dissimilar. Automobile insurance marketers make their commission by selling as many insurance policies as they can do. The marketer  does her/his best to make as many policy sales as possible, therefore making small profit per policy on too many policies sold. Financial consultants work in a different way as they try to make larger money from their consulting work on each of the very few number of clients they have. Selling an automobile insurance policy is not the chief worry of a financial consultant, but for her or him automobile insurance is one of the necessary focus of the financial consultation course.

Automobile insurance agents and brokers look at car insurance as a way to protect the customer  when there is a loss to the car itself in the instances of theft, fire or another loss; in addition to the fact that car insurance is the law. Financial consultants  look at car insurance as an important aspect of their clients risk management process. To the financial consultant a automobile insurance policy is not to restore the automobile in the event of loss, but is mostly about shielding the assets and capital of the insured, especially against possible legal proceedings that can wipe the assets of their clients.

A few automobile insurance marketers would even advise the public to reduce liability insurance as a strategy to save money. No sound financial consultant will ever make such an advice.  No way!

When does height matter?

How high your liability limits must be  has to be the main issue when you buy automobile insurance. Perhaps you need only the minimum liability limits required by the states in situations where: (1) You obtained many quotes with higher limits and  the cost was very prohibitive. You simply did not have that money. (2) Your present assets and capital are too insignificant to expose you to lawsuits for at fault automobile accidents. (3) You are a high risk operators where no other insurance company wants to insure you except those that insure only at the minimum state limits. But, if you have certain amounts of assets and capital, or is expected to have substantial assets or capital, then you have to be alarmed about the height of your liability limits.

What if you are not rich and you do not have ample of assets? For people with modest or no capital, the height of liability limits should still be much of a worry for them. In Illinois and several other states, liability insurance coverage includes specific protection to pay for you and your household, for your bodily injuries in situations when you get hit by an automobile that is legally uninsured, or, in other scenarios, the car that hit you is insured but the insurance paid  by its insurer was inadequate to pay for your bodily injuries. According to the Insurance Research Council, approximately 15% to 17% all drivers in the United States are uninsured. Coverages for Un-insured Motorist (UM) and Under-insured Motorist (UIM) diverge from state to state with regard to their obligatory status and limit amounts. In Illinois UM is compulsory at the limits of $20,000 for bodily injury per person and $40,000 for bodily injury per accident. Underinsured motorists coverage is not mandatory in Illinois but insurance companies must offer that coverage to the insured clients for policies issued with liability limits over the state limits. Insured people can still decline to have higher uninsured/ underinsured motorists (to save money?) but it has to be in writing. As you can see, your liability only policy gives protection for your bodily injuries and those of your household; and being assured that you have high limits on both liability, UM and UIM can have incredible result on you and your household members.

Edward Sneineh,

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