How Much Car Insurance Do You Need – Really?

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Every driver in Oregon is required to have car insurance. Driving without it can get you a ticket with a fine of up to $427. In case of an accident, it begs the question then: How much car insurance do you need – really? And what kind?

As a personal injury lawyer specialized in car accidents, I can tell you that if you’re injured in an accident while uninsured, you might not be able to recover any damages for your pain and suffering. So making sure that you’re informed and have the correct type of coverage is hugely important. This guide will help you buy the correct coverages for your unique situation.

How much car insurance do i need?

Car Insurance Coverage Types

For consumers, exactly what car insurance coverage types there are – and which ones to buy – is one of the most obscure and confusing aspects of modern life. There are indeed a heap of different types of car insurance coverages, which I’ll explain in detail below:

  1. Liability Coverage
  2. Personal Injury Protection
  3. Uninsured Motorist
  4. Collision
  5. Rental Car Coverage
  6. Gap Insurance
  7. Umbrella Insurance

1. Liability Coverage

What is it? Liability coverage pays the damages of others when you’re at fault for causing the accident. It also reimburses you for economic damages such as medical expenses, lost income, and property damages. Importantly, it covers noneconomic damages too – namely, pain-and-suffering and emotional distress for those injured in the accident.

What’s required by law? Oregon law requires a minimum liability coverage of $25,000 for injuries or death to any one person, and a minimum of $50,000 for everyone injured or killed in any one accident. This is what is referred to as split limit coverage because there is one per person limit and another per accident limit.

How much Liability Coverage should you have for injuries? Most experts recommend liability insurance coverage for personal injuries of at least $100,000 per person and $300,000 per accident.

How much Liability Coverage should you have for property damage? It’s also recommended to buy a minimum of property damage coverage of $20,000 per accident. Property damage includes damage to vehicles, personal property in vehicles, and to buildings and other property caused by a car accident.

It's good to know car insurance coverage types when driving on icy roads

2. Personal Injury Protection Coverage

Personal Injury Protection coverage – also known as the shorter “PIP” – is like health insurance for your car. Every auto insurance policy in Oregon must have PIP coverage, with limited exceptions. PIP benefits include medical expenses, lost income, funeral costs, babysitting and help around the house.

Who is entitled to PIP benefits? You, and any passengers in your car who are injured in an accident, are entitled to PIP benefits under your auto insurance policy. It doesn’t matter who was at fault for the accident. It doesn’t even matter if anyone was at fault. The law defines “passengers” as anyone involved in the “use, occupancy or maintenance” of any car involved in the accident.

Can I stack PIP benefits from multiple policies? Yes! PIP insurance for the owner of the car in which the injured people were riding in pays first. As a passenger, you can recover additional PIP benefits from your own car insurance, if the initial  coverage runs out. In other words – you can stack your PIP benefits to double the amount of coverage available.

What are the minimum PIP payouts? PIP benefits are guided by this law, and payouts are as follows:

  • Medical Expenses $15,000
  • Lost Income $3000 per month for 1 year
  • Funeral Benefits $5000
  • Babysitting $750
  • Help around the house $30 per day

How much PIP Coverage should you have?  I recommend having $100,000 of PIP medical benefits. Increasing your PIP limits doesn’t increase your insurance premium much, and you don’t have to pay for your medical treatment if your health insurer refuses to pay.

For more information about PIP insurance, read: Personal Injury Protection: How Does PIP Insurance Work in Oregon.

3. Uninsured Motorist Coverage (“UIM”)

What is UIM? UIM coverage is there for you if you are injured (or killed) in an accident with an uninsured (or underinsured) driver. (Learn all about What You Need to Know About UIM in Oregon.)

Minimum UIM coverages: Oregon law requires car insurance policies to have the same amount of UIM as they do for liability coverage. That is, unless the insured chooses lower limits and submits them to the insurance company in writing.

Minimum recommended UIM personal injury coverage: $25,000 per person, and $50,000 per MVA.

How much UIM coverage should you have? It’s a good idea to have the same amount of UIM coverage as you do liability coverage. As noted above, most experts recommend liability insurance coverage of at least $100,000 per person, and $300,000 per accident.

How much UIM property damage coverage should you have? Insurance companies are required to make uninsured property damage coverage available if you want it. But you are not required to buy it. If you do buy it, you must purchase at least $20,000 of coverage per accident.

4. Collision Coverage

What is it? Collision coverage pays for damages to your car in case of an accident with another car or object, regardless of who is at fault.

How much will it pay? Collision coverage will pay the lesser of the following costs: for the repair, or if the car is totaled, the fair market value of your vehicle on the date of the incident. The insurance will take the deductible off the top of the benefit too.

What about the deductible? Since the deductible is the amount the insurance company deducts from what they are required to pay under the policy, it reduces their payout. For example: the insurance company would only be required to pay $2,500 if your vehicle sustained $3,000 in damage and you had a $500 deductible. The higher deductible, the lower insurance premium.

When do you need collision coverage? If you have an expensive car, you’ll want to have collision coverage. Without it, your insurance company will not pay to repair your car when you are in an accident that is your fault, or that is not someone else’s fault.

How much coverage should you have? The question rather is: how high of a deductible should you have? Answer: whatever you’re comfortable with, but you should have a deductible of at least $500-$1,000.

5. Comprehensive Coverage

What is it? Comprehensive coverage – also known as “full” coverage – pays for property damage to your car caused by something other than an accident. Comprehensive coverage compensates you if your car was stolen, vandalized, damaged by a flood or fire, or similar type of incident.

How much will it pay? Like with collision coverage, comprehensive will pay the lesser of the two costs: either for the repair, or the fair market value of your car on the date of the incident (minus the deductible). To give a real life example: your insurance would only be required to pay $5,000 if your vehicle sustained $10,000 in damage – but was only worth $6,000 on the date of the incident and you had a $1,000 deductible.

Do you really need comprehensive coverage? Again – if you have a fancy or extravagant ride, you’ll probably want to buy this type of coverage.

How much coverage should you have? Given that this is the most optional of all coverages, you could probably look at having a deductible of $500-$1,000.

6. Rental Car Coverage

Rental car coverage pays for a rental car while your vehicle is being repaired after an accident or other incident covered by your policy. If you’re accident-prone, don’t have access to a second car in your household, or live in a high-traffic-density area, this type of coverage might not be a bad idea.

7. Gap Insurance

Gap insurance pays the difference between the fair market value of your car, and the balance owed on the loan to purchase or finance the car.

Do you need gap insurance? If you borrowed money to buy your car, you should buy gap insurance. Your insurance company will only pay the fair market value of your totaled car – and that will most likely be less than the amount you owe on your loan.

8. Umbrella Insurance

Umbrella insurance is a type of extra liability insurance. It covers claims beyond the limits of your homeowner’s, auto, and other types of insurances.

For example: if you have auto insurance with liability limits of $100,000 per person and $300,000 per accident, your umbrella insurance will pay if you injure someone, it was your fault, and their damages are more than $100,000.

Do you need umbrella insurance? If you have assets such as real property with lots of equity, you should probably have an umbrella insurance policy. 13% of personal injury liability awards and settlements are for $1 million or more – and this coverage protects you against those cases. If you don’t have any such assets, you may not need umbrella insurance. Instead, you may have to file for bankruptcy if you severely injure someone in an accident and they obtain a large judgment against you.

How much umbrella insurance should you have? I recommend $1 million of umbrella coverage.

Have you been injured recently in a car accident, and are struggling now with untangling the obscure web of red tape, legalese, and paperwork that are insurance claims? We can help.

If you need assistance filing your UIM and PIP claims, or want a lawyer to help you deal with a refusal from your insurance company –

Gary R. Johnson Law is here to help and advocate for you.

We never charge for an initial consultation, so give us a call today.