Speaking of high auto insurance costs: part of the reason why it costs so much per month to insure my BMW M2 (aside from the fact it’s a fast BMW) is that I have way higher liability coverage limits than what is mandated by California. This great State of ours calls for only $15,000 for injury/death to one person, $30,000 for injury/death to more than one person, and $5,000 for damage to property (15/30/5 in insurance parlance). Those minimums are laughably low when considering the average selling price of new cars in America is about $48,000.
That means if you collide with a brand-new Toyota RAV-4, and you only have the California minimum coverage, high chance you will be personally on the hook for damages over those minimums. A total-loss for the RAV-4 is already above $30,000, so let’s not even add on any potential bodily injury of the opposing driver.
And yet the minimums aren’t any higher, because that means everybody’s base premiums would be higher as well. It seems California is incentivized to keep the minimums low, because more people would be able to afford auto insurance on the low end. (But driving is a privilege, not a right?) No need for low-income folks to carry high liability when there is nothing in their bank accounts for the opposing party to sue for.
Obviously, if you’re at least a medium earner with a some assets in reserves, you’d be risking a lot to not have higher coverage. I personally have 100/300/100 on the M2’s policy. On the other hand, I also carry uninsured/underinsured motorist coverage. Because a driver carrying State minimums can’t possibly cover a total loss of the M2. It’s kind of perverse, actually: if you have assets, you have to pay more to cover yourself and cover for other drivers’ insufficient coverage. Fair, it is not.
But I gladly pay my high insurance premiums. My risk tolerance is super low when it comes to preserving the integrity of my bank accounts. The car can always be replaced with a check from my insurance; never ever dependent on the other party’s insurance to make me whole.
Numba wun.