Saving 15% or More Can Cost You Hundreds of Thousands of Dollars

Some automobile insurance companies advertise that drivers can save thousands of dollars by switching to their company.  Those savings, however, can come at a significant cost.

According to, the average monthly car insurance premium for Maryland drivers is around $78.  If a Maryland driver saved 15% of the monthly average by reducing the amount of coverage, the annual savings would be approximately $140.00.  These premium savings may not cover medical expenses in the event of serious car crash, but the expenses might be fully covered by the additional insurance that could be purchased with the “savings”.

Liability insurance protects you and your assets if you are at fault in an accident.  Uninsured Motorists Insurance (“UM”) benefits the driver and other occupants of the insured vehicle if they are injured because of the fault of a driver for which there is not sufficient liability insurance to fully compensate the injured victims.  For example, a victim with $200,000.00 or more of Uninsured Motorist coverage that suffered a $200,000.00 loss caused by a driver with only $50,000.00 of liability insurance could fully recover by receiving $50,000.00 from the other driver’s insurance company and $150,000.00 from her policy’s Uninsured Motorist coverage.  If she had less than $150,000.00 of Uninsured Motorist, she most likely would not receive full compensation for her losses.

Liability and Uninsured Motorist insurance contain per person and aggregate limits.  The aggregate limit is the total amount the insurer will pay on all claims from an accident.  For example, limits of “$100,000.00/$300,000.00” mean that the insurer for an accident will pay no more than $100,000.00 to any person and no more than $300,000.00 total.

The amount of Uninsured Motorist coverage is usually tied to the liability insurance provided by the policy.  Thus, reducing the limits of the liability insurance reduces Uninsured Motorist coverage.  The levels of insurance insurers offer varies.

Per person and aggregate limits of insurance we have seen include:

Per Person Total
$30,000.00 $60,000.00
$50,000.00 $100,000.00
$100,000.00 $300,000.00
$250,000.00 $500,000.00
$500,000.00 $1.000,000.00

Accordingly, a reduction in coverage may result in hundreds of thousands of dollars less protection than before, whether you cause an accident or are a victim.

There are approximately 55,000 car accidents in Maryland each year (MVA). The majority of accidents are the fault of uninsured or underinsured drivers.  Insurance applicants thus need to consider what happens if they are the victim.   In that situation, the victims must look first to the at fault driver’s liability insurance and if that is insufficient to the driver’s assets and potential future earnings and/or to uninsured motorist coverage for compensation.

Adequate insurance is crucial because automobile accidents can cause substantial damages.  Standard coverage amounts such as $100,000 may sound sufficient.  With surgeries, hospital stays, rehabilitation costs and other medical costs and lost income the economic losses alone in serious cases frequently exceed low insurance limits and total hundreds of thousands of dollars.  Further, statistics from the National Safety Council estimate that the average cost of damages for a death arising from a car accident is over $1 million.

Most drivers do not have the money to fully cover medical expenses associated with the severe personal injuries that can result from car accidents. Additionally, they may have lost wages and incur unforeseen support costs due to an injury.

There are ways to save on car insurance without sacrificing vital insurance coverage. Many companies offer discounts to safe drivers or loyal customers.  Further, some families can achieve “economies of scale” by combining multiple policies into one.  Opting to pay premiums every six months instead of monthly also saves money.

The applicant seeking to reduce the insurance premium should also review “add-ons” such as rental reimbursement or roadside assistance.  For example, rental reimbursement may not be worth the cost if the family owns a second or third car.  Roadside assistance may also not be necessary for vehicles that are under the manufacturer’s warranty or if such services are available through AAA or another provider.

The dollars saved by reducing coverage limits might be helpful during tough economic times. However, times will always be made harder in the event of an accident when there is not adequate coverage. In that situation, the few dollars you did not save might be the difference in saving your family’s assets.

For more information regarding personal injuries and personal injury protection, please contact the lawyers at Azrael Franz.