Don’t Skimp on Car Insurance

April 4, 2016 10:57 am

Christine H. Canapari, ChFC®

Senior Financial Advisor & Manager of Client Services

There’s nothing I love more than saving money, but cutting corners on car insurance is not an option.  Whether it’s home, life, health or car insurance, proper coverage is essential.  If you are at fault in a car accident, you want to be sure you have the necessary insurance to cover yourself and your family to prevent your financial plan from being derailed. Each state sets its own minimum liability insurance requirements, but the problem is that the state requirements could be well below adequate coverage needed to protect your nest egg.  Let’s take a look at coverage options and needs.

Liability Coverage

Almost every state requires drivers to have minimum amounts of liability coverage for bodily injury and property damage.  In Rhode Island, those requirements are listed as 25/50/25 meaning:

$25,000 bodily injury liability per person

$50,000 bodily injury liability per accident

$25,000 property damage liability per accident

Many states also require uninsured or underinsured motorist coverage.  This coverage comes into effect if you are injured by a hit-and-run driver or by a driver who doesn’t have any or enough coverage.  In Rhode Island, if you only purchase minimum limits of bodily injury and property damage liability you can decline underinsured/uninsured motorist coverage, but it is not recommended.

So How Much Coverage Do I Need?

Generally speaking, you should have coverage that is equal to your assets to protect yourself in the event of a lawsuit.  If you consider the current cost of healthcare, it is evident that $25,000 may not be enough to cover ones medical bills resulting from injuries from an auto accident.  So your coverage might look more like 100/300/100 or higher depending on your personal situation.  Certain assets, like 401ks and in some cases IRAs, would be protected in a lawsuit, but other assets may not be able to be preserved depending on state law.  If your profession is one that is vulnerable to lawsuits, like that of a doctor or business owner, you will want to be especially mindful of keeping assets protected.  High net worth individuals or couples may also consider purchasing an umbrella liability policy.  An umbrella policy offers additional liability protection and can be purchased from your car or home insurance agent.

Cost Savings Strategies

Having adequate coverage doesn’t mean you can’t shop around.  Premiums can be substantially different from one company to another.  I recently saved over $400 per year by switching insurance companies.  When you are shopping around, however, make sure that you are getting price comparisons for the same form and amount of coverage.  Using the same insurance company for all of your property and casualty insurance needs usually provides a substantial multi-policy discount.  Lastly, increasing your deductible will also normally provide significant savings.

So take a few minutes to check that car insurance policy, and make sure your coverage is sufficient.  It’s very easy to add more coverage if you fall a bit short.  Accidents sometimes happen, but you’ll be able to rest easy knowing that you have proper coverage in place.

Chrissy Canapari serves as Senior Financial Advisor and Manager of Client Services at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail her at

The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Chrissy’s opinions and comments expressed on this site are her own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.