In Georgia, you must have proof of financial responsibility for your vehicle. In layman’s terms, that means you have the funds to cover damages your vehicle causes to other vehicles or other people. For most drivers, that means you carry auto insurance. However, there is often a large gap between the amount of coverage you’re required to have and the amount of coverage you really need.
It is highly recommended that you carry a broader scope of coverage and higher coverage limits than the required state minimums. This means weighing how much coverage you need against what you can afford; your ability to weather any financial risk, such as lawsuits, and whether you have assets you want to protect.
If you were to critically injure or kill people in an accident, claims for medical bills, lost income, pain and suffering, in addition to property damage can easily surpass minimum coverage of $50,000 bodily injury protection per accident and $25,000 of property damage per accident. If the accident were serious enough, lawyers could go after assets you may accrue years after the accident.
According to the Georgia Department of Transportation's Crash Analysis, Statistics and Information Notebook of 2008, more than six million people were involved in a motor vehicle crash between 2000 and 2006. During that seven year period, crashes resulted in more than 2,500 injuries, on average, each week.
In general, to be adequately covered for an accident, you should also carry uninsured or underinsured motorist coverage. UM coverage insures against injuries you receive in an accident caused by an uninsured driver, an underinsured driver or a hit-and-run driver. Furthermore, this coverage covers bodily injury to your passengers and may cover earnings you or your passengers lose, as a result of the accident.
While we all hope that we never have to rely upon our policies, we are quite thankful we have insurance when disaster strikes. However, keep in mind, that you shouldn't buy more insurance than you can afford.
William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.