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Automobile insurance has its own language. As I explain in my guide, Abandoned on the Road, insurance is no little different than gambling. It is based on odds and probability. The government has felt that spreading risk through legalized gambling is so important that everyone must participate. Unfortunately, most people do not know that “splitting tens,” at the black jack table and refusing underinsured motorist coverage from your insurance agent are both very poor decisions.
Bodily injury insurance is what most people think of as liability coverage. Bodily injury coverage protects you and your family in the event you are involved in an automobile collision and are obligated to pay other people for costs associated with their physical injury. Although we do not like to think about it, automobile collisions can lead to serious injury or even death.
The mandatory minimum limits for bodily injury coverage in Montana is $25,000 per person and $50,000 per collision. This mandatory minimum amount of coverage has remained the same for decades in Montana and does not begin to reflect the costs of medical treatment today. A single day in the Intensive Care Unit runs over $10,000.00. If you or someone in your family is in a collision with this minimum amount of coverage, you could end up financially ruined without sufficient coverage.
A good rule of thumb to determine an appropriate amount of coverage is doubling the amount of total assets you and your family currently possess. This is the gross amount of assets and does not consider how much you may owe on those assets. Even a “broke” college student is going to see that the assets they possess exceed $25,000.00. For this reason, I recommend that the absolute minimum amount of coverage a person should purchase is $50,000.00 per person and $100,000.00 per collision. Any homeowner should have at least $100,000.00 /$300,000.00 in bodily injury coverage to keep from losing his or her home.
About four years ago, I represented a young man who was riding his motor cycle when he was struck by a woman on her way to church. My client’s medical bills far exceeded the $100,000.00 insurance policy limit this woman had at the time of the collision. This woman owned multiple rental homes and her net worth was well over $1,000,000.00. For some inexplicable reason, she did not have an umbrella policy (see below) or enough automobile insurance to protect her $1,000,000.00 in assets. Because my client’s medical bills exceeded the insurance policy limits, we had no choice but to make a claim that exceeded her insurance policy limits. In other words, she placed her assets in jeopardy because she wanted to save a few dollars on insurance coverage. She literally stepped over a dollar to pick up a dime and it cost her.