Lets first understand what minimum limits are and how much they might cost. In College Mr. John Patton, the longest tenured teacher at Missouri State, explained to me that the first 1 dollar of insurance is incredibly expensive. The first dollar has all of the cost for overhead, and actuaries and underwriters and claims adjusters associated with it, and it is the first 1 Dollar paid on a claim. After the first dollar they get cheaper, as the chance of being paid out gets lower and all the hard work was done by the first dollar.
That insurance concept is the basis for insurance rates at varying limits of liability. In Missouri we can carry rates as low as 25,000 per person, and $50,000 per accident for medical and $25,000 per accident for property coverage. We know all to well how expensive medical is now, but did you know in Missouri the average value of a car is 33,000. The inadequacy of this coverage is blaring.
How Much Can You Save By Carrying The Lowest Limits?
The average driver in Missouri pays $56.00 per year for minimum rate insurance. With that you get: 25,000 for insuring one person, 50,000 for everyone in the vehicle, 25,000 for someone else’s property that you damage and 25,000 for your injuries and 50,000 for everyone in your car if you are hit by an uninsured driver. To move from Missouri Minimum to 250,000/500,00 it cost on average 25% more. So 10x the coverage for $20 per month! Here is a quick comparison chart:
| Bodily Injury | Bodily Injury | Property | Uninsured | Under Insured | Average | |
| 1 Person | BI All People | Damage | Motorist | Motorist | Cost | Difference |
| $25,000.00 | $50,000.00 | $25,000.00 | 25000 / 50000 | $0.00 | $80.00 | |
| $50,000.00 | $100,000.00 | $50,000.00 | 50000/100000 | $50000 / 100000 | $88.00 | $8.00 |
| $100,000.00 | $300,000.00 | $100,000.00 | 100000 / 300000 | $100000 / 300000 | $93.60 | $13.60 |
| $250,000.00 | $500,000.00 | $100,000.00 | 250000 / 500000 | $250000 / 500000 | $100.00 | $20.00 |
So, what other cost could you be looking at if you carry minimum coverage insurance? Well for one, the coverage you carry is also the coverage you have in your car if you and your family are injured by an uninsured driver. If you and one or 2 loved ones are hit by an uninsured driver there is a good chance your bills will be more than $50,000 for everyone in the car.
What Are The Consequences of Carrying Minimum Insurance?
If you have Minimum coverage and you have an income and or assets, you are running the risk to be sued. It does happen, the top reasons for garnishments is 1. Child Support, 2. Tax Liens, 3. Spousal Support and 4. Car accidents. It is the fourth leading cause of involuntary seizure of your paycheck until the debt is paid. But hey, you were able to buy one extra latte per week.
Now lets look at hitting a new vehicle. If you are in an at fault accident and hit the average new vehicle of 42k, you are going to immediately owe 17k if you total loss. Even worse, if you cause major injuries, the 25k per person limit may not be enough.
What is A Better Way to Save Money?
There are much better ways to save money, rather than buying state minimum car insurance. If your agent recommended just the state required, your probably with the wrong agent. Our best recommendation is shopping with a local insurance broker like Millennium Brokers. A Broker can help shop your insurance with 10-15 companies while making sure you have the coverage you need. You can get a quote started by visiting is online www.millenniumbrokers.com or giving our office a call 417-773-7822.