Lyles Insurance
  • Home - Lyles Insurance
  • About Us
  • Contact Us
  • Blog
  • Request A Quote

Case Study: Real Data That Shows Why State Minimum Liability Auto Insurance is a Rip Off!

12/4/2013

0 Comments

 
​In order to save money, many people choose to skimp on their auto insurance liability coverage, and go with the lowest limits that their state will allow. As I have preached to people countless times, this is a very bad idea! But no matter how hard an agent tries to get the point across, not too many listen.


    So, I decided to do a case study on auto insurance liability coverage to see just how much an increase in coverage raises auto insurance premiums. So for my case study, Here's what I did:
  • I took real quotes that I have recently ran for potential customers and compared the liability premiums at different levels.
  • The 3 different levels I chose were: 25/50/25, 50/100/50, & 100/300/100. I chose 25/50/25 as the baseline because it is close to most states' minimum liability requirement. I chose the other levels because they are common among most auto insurance companies.
  • I recorded the premiums for each level using $1.00 as the 25/50/25 baseline, then compared them to the cost at different levels.


Key Finding: Significantly increasing liability coverage only amounted to pennies on the dollar more in premium.


  • Doubling your liability coverage from 25/50/25 to 50/100/50 increased liability premium by only 3 to 4%.


  • Increasing coverage from 25/50/25 to 100/300/100 increased liability premium by only 21-26%.


  • Premium increases were fairly consistent all across the board. The only group that was not consistent were drivers with the very worst driving records (less than 5% of the drivers studied). They paid more of an increase than listed above. But all others fell into the price ranges listed above.


Picture
Notes about the case study:


  • Change in liability coverage was the only variable change from each quote. No other variables were changed or considered.

  • Quotes were ran as is, it didn't matter clean record vs bad record, preferred vs. non-standard, homeowner vs. renter, liability only vs. liability plus physical damage coverage ......... All were included in the case study.

  • Which state a person lived in didn't make a difference. While liability coverage costs vary state to state, the percentage increase from one level to the next was constant among the six states compared.




    Summary:


    When considering low levels of liability coverage, hopefully this case study will make you think twice, and finally sink in. Doubling liability coverage only amounted to about 3 cents on the dollar, and taking even higher levels only amounted to about a quarter on the dollar. As I've mentioned before, state minimum liability coverage (no matter which state you live in) is lousy!  These small increases in premium are well worth the higher coverage that you get for it.


    Also keep in mind that Uninsured Motorist (UM) coverage is very important, and it is limited to the amount of liability coverage you select. So if you go skimpy on liability coverage, you force yourself to go skimpy on UM coverage as well.


   
Get an Auto Insurance quote with Lyles Insurance



Call me for a Quote




Related Blog Articles:

The Basics of an Auto Insurance Policy: Breakdown of each coverage explained



0 Comments



Leave a Reply.

    Picture

    Author

    Dan Lyles is an Independent Insurance Agent serving Ohio, Indiana, Michigan, Pennsylvania, Virginia and West Virginia..

    Archives

    March 2021
    November 2020
    September 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    October 2019
    September 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    March 2018
    February 2018
    December 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    October 2015
    August 2015
    December 2014
    November 2014
    October 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    May 2012
    April 2012
    March 2012
    December 2011

    Categories

    All
    Things You Must Know When Buying Snowmobile Insurance In Michigan

    RSS Feed

Lyles Insurance copyright 2020
  • Home - Lyles Insurance
  • About Us
  • Contact Us
  • Blog
  • Request A Quote