Dirk Derrick's book "3 Feet From Disaster" gives tips on how to purchase the right car insurance and why the insurance companies wouldn't want to sell you more coverage.


Now you ask yourself, "Why wouldn't the insurance company want to sell me more coverage?"

Here's the answer:
Because it is so cheap, some insurance companies would rather make $400 on you per year for $25,000 worth of Uninsured and Underinsured coverage than $450 per year for $500,000 of Uninsured and Underinsured Motorist coverage.  If you are paying $400 per year for $25,000 in coverage, you're getting only $62.50 dollars of coverage for each dollar you spend.  If you are paying $450 per year for $500,000 in coverage, you're getting $1,111 dollars of coverage for the same dollar you spend.

Now comes the question of "Do I really need or should I have $1 million dollars worth of liability, Uninsured, and Underinsured Motorist coverage?  Should that be my policy limit on each of my vehicles?"

Answer:
Not necessarily.  Another great thing about Uninsured Motorist coverage and Underinsured Motorist coverage is that it may be stackable, which means if you are in a vehicle you own and are injured, you can stack the coverages of each of your vehicles.  Therefore, if you have three vehicles and all have $300,000 if Uninsured Motorist coverage and you are injured by an at-fault driver with no insurance, you actually have $300,000 + $300,000 + $300,000 which equals $900,000 of Uninsured Motorist coverage available to you.  The same applies for Underinsured Motorist coverage.

Therefore, if you have two cars you can buy $500,000 per vehicle in Uninsured and Underinsured Motorist coverage, and as long as you are injured while you are in your car, you have $1 million dollars worth of coverage.  If you have four vehicles, you only need $250,000 coverage on each vehicle to have the same coverage.

I would also recommend the Med-Pay / Personal Injury Protection (PIP) coverage.  If you are injured in an accident and you incur medical bills, you can submit your medical bills to your insurance company and receive reimbursement for those medical bills through your Med-Pay and Peronal Injury Protetction coverages.  This is important because it allows you to get the medical care you need.  It is also important for those individuals who have health insurance to cover their medicals, because the Med-Pay or PIP will reimburse you for the medical bills whether they are paid by health insurance or not.  This is important for those people who are either temporarily or totally disabled.  Reimbursement for these medical expenses through this coverage provides  money to live on until your case is eith tried or reached a point that it is ready to settle.  I would recommend somewhere between $5,000 and $10,000 in Med-Pay or Personal Injury Protection coverage.