QuestionI have both auto and homeowner's insurance with the same insurance company.
My daughter has lived overseas most of her life (and did not drive), but is now residing in the US since July because she is going to college stateside in September. She is 18 and has just now taken a week long driver's ed course which qualifies her to get her license as soon as the certificate arrives in a few weeks.
I just bought a new car (title in my name) and will add her to the policy when she gets her driver's license.
Although she's completed (and passed) the course, her practical experience behind the wheel has been limited, and will be limited even more because almost as soon as she gets her license, she will go to college in another state without a car and will not be driving at school. However, she will need to drive when she comes home between quarterly breaks. So, she will be driving...then not driving for awhile, then driving again, etc.
Am I being overly cautious in thinking that an umbrella policy should be considered due to her lack of practical driving experience and just in case of a worst case scenario of her having a bad accident and being at fault and her or me being sued?
Thanks.
Answer Hello Jennifer,
Although I am not familiar with your net worth, I doubt seriously that you need an umbrella coverage. What you do need, however, is to make certain that you have adequate auto insurance coverage to protect you.
For collision and comprehensive coverage, which is usually an optional coverage, consider this - if you sustained a loss would you have the financial capacity to replace your car if you did not have the coverages? And, as to the deductions, select an amount that you could pay in the event of an at fault loss.
But the majority of consideration should be directed to your liability limits, which you get to select. We're talking about liability Bodily Injury (BI) and Property Damage PD)coverages. These coverages, of course, protect you from damages caused by you or other insureds on your policy.
Liability limits should be reflective of our personal and financial obligations. Do you own a home, a business? Do you have dependants? Could you sustain a personal judgment if you were sued personally for an at fault accident? Simply, put are your insurance coverages going to adequately protect you if you are found responsible for an accident?
If you believe your insurance limits could be inadequate, obtain some expert advice or contact your agent, and make necessary changes to your policy. Clearly, while lower insurance limits might save you a few hundred dollars per year now, could you sustain your financial obligations if disaster were to occur in the future? That is the essence of liability coverage.
To review your specific coverages, refer to the Declarations Page of your insurance policy.
This is a required policy document that specifies your exact auto insurance coverages. Your liability coverages will be expressed in groups of two or three, separated by a slash mark.
The first number will be lower than the second. That's because the first number represents the Bodily Injury (BI) insurance limits for each person. The second number represents the Bodily Injury (BI) insurance limits for each occurrence. If there is a third number, that will be your total insurance limits for Property Damage (PD)limits.
As an example, if you have $50,000/$100,000/$25,000, translated that means you have $50,000 per person in BI coverage insurance limits, $100,000 per occurrence in BI coverage insurance limits, and $25,000 total PD insurance limits.
If you have Uninsured Motorist (UM) coverage, that will be expressed separately in the same manner as for BI coverage. UM protects you if you are involved in a not at fault accident with an uninsured or underinsured driver.
No, absolutely you are not being overly cautious. I doubt you need an umbrella coverage unless you have substantial assets. What you do need, however, are adequate liability limits to protect you in the event of an at fault disaster.
One other thing, make sure the insurance company knows that your daughter will be driving only on an occasional basis. Of course, she needs to be coverad any time she drives, but the fact that she will not be a regular driver could lower your rates. You would need to check to verify that. And, of course, if she becomes a regular driver, then you would need to notify your company of that as well.
Hope this helps. Good luck!
Jane Pytel
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