What’s with all the numbers on my Arkansas auto insurance policy?
Have you ever glanced at this? This is your declaration page, or at least part of it. You receive this in the mail or in your email shortly after you sign up for a new Arkansas auto insurance policy. You also get a new declarations page each time your auto policy renews. Some auto insurance policies renew every 6 months, some it’s every 12 months. There are pros and cons to both. Neither has a deciding advantage over the other.
Back to the page full of numbers.
Coverage limits show up in many different forms and fashions, depending on which Arkansas auto insurance company you’re using.
They’ll usually be broken down between limit one & limit two (#/#/#) or combined single limit (#). So what do they stand for? What do they mean? What do my liability limits actually cover?
I’m glad you asked.
The first and second numbers apply to the limit of bodily injury on your auto policy. It’s also good to know that the term liability refers to a debt. I say this because your liability limits DO NOT pay for damages to yourself or your car. It refers to the debt you’ve incurred to others.
The first limit is the maximum amount that your auto policy will pay for bodily injury per person in any one accident. Example: you cause an accident with injuries - no one person will receive more than $100,000 from the insurance company for their bodily injuries. If there are injuries that require more financial assistance… you’d be responsible for the difference. This is why minimum liability limits isn’t always a good idea.
The second number is the maximum amount your auto policy will pay for all bodily injuries within the accident. In the same example, the most an Arkansas auto insurance company will pay for bodily injury would be $300,000.
Remember, no more than $100,000 per person with a maximum of $300,000 per accident.
Example: you hit another car causing bodily injury to you and your passenger, and the three in the oncoming car. The injured passengers in the other vehicle require an ambulance for a trip to the emergency room. Your passenger is hurt but doesn’t need an ambulance. Online research shows the national average for a trip to the hospital via ambulance is around $2,000.
What about when they get to the emergency room? What test will be performed and supplies billed for their care? What if they need a MRI, CAT scan or other expensive procedures? What if one of them is in a coma or has a brain injury that requires long term care? How far do you think your $100,000 coverage will go?
The important thing to remember is there were 4 injured persons. There is a maximum of $100,000 per person for bodily injury. Kinda... The policy will only pay a total for bodily injury of $300,000. Any amount incurred above that limit can be pursued through a civil suit and possibly wage garnishment.
See how quickly this can become a problem and how long it may take you to overcome?
But wait a minute you say, "my limits don't show 100,000 or 300,000. They are less."
I, personally don't recommend less than 100/300/100. I don't sell less than 50/100/50. And I don't offer 25/50/25. So, if you see $25,000 anywhere on this page, you need to have a conversation with your agent. Let them know you no longer feel comfortable with limits that low.
If you would like to chat with me before you call them, I'd be happy to help you construct that conversation. I WILL NOT deliberatly try to convince you to switch to me.
This is exactly why we at The Gann Agency don’t write minimum liability limits. We also don’t write auto insurance policies without uninsured and underinsured motorists coverage. There is simply too much at risk. We don’t want you to have a higher premium, but we do want you to have sufficient coverage - coverage that gives you the safety net you need if you find yourself in a similar situation.
There is one other reason why we don’t offer the minimum limits required by the Arkansas Insurance Department. Arkansas' legal minimum liability limits are 25,000/50,000/25,000 (25/50/25).
The last amount of 25 in the 25/50/25 equation (the picture above is 100/300/100) stands for up to $25,000 to be paid towards total property damage in any one accident. Remember, liability means debt. This $25,000 is not for your vehicle or your property damage, but that of others in which you are now responsible for. Full Coverage (collision coverage to be exact) is how you would get your vehicle repaired. That’s a different conversation.
When do I no longer need full coverage?
We will assume the other party was driving a 2012 Jeep Cherokee AND there was a retail store sign damaged in the accident. Have you been car shopping lately? Most vehicles cost between $25,000 and $35,000. You may not have enough to cover the other vehicle if you only have the minimum liability limits. Let’s assume the Jeep was totalled. It has a cash value of around $40,000… and that retail store sign - do you think they don’t want you to fixed it? You’re responsible for it as well.
As you can see the $25,000 liability limit doesn’t even come close to the cost of all the damage you have unintentionally caused.
I hope you have a better understanding of all the numbers on your auto insurance declarations page. If not, don’t hesitate to contact me. My name is Melissa and I would be happy to answer your questions.
I’ve attached a PDF that goes into a bit more depth regarding liability limits.
Our agency’s minimum limit is 50/100/50. However, we do our best to evaluate each potential customer in order to determine the proper limits for their financial situation.
We don’t recommend you pay for liability limits that you don’t need. However, we also don’t recommend that you be under-insured.
The Gann Agency is an independent auto insurance agency in Bryant, Arkansas. Some might say we're an auto insurance agency in Benton, Arkansas. Regardless, we have created Arkansas' most convenient online auto insurance process as an independent agency.