How much Auto Insurance coverage do we need?

[Pat96714]

My wife and I are recent convertors to Mustachianism.  Only debt is Student Loan which will be 100% paid upon sale of my monstrous truck.  (Just purchased a Hyundai Touring, and shopping for a bike).  Very little cash assets, maybe $15,000 (and rising).  Both steady earners approx. $60,000 total take-home (and rising).   My wife and I are married 1 year and have just moved into the home we built from the ground up.  Home value approx $500,000, no mortgage.

Upon insuring my new-used 2009 Hyundai, my insurance company (USAA) told me I should up my coverage to cover liability against our home.   I'd like to keep my auto insurance premium to a minimum while still covering our ass(ets). How much coverage do we really need?

As best I understand my policy, here are the numbers...

Liability $300,00/accident - $100,000/person
Property Damage $50,000/accident
Personal Injury $10,000 with $1,000 deductible
Uninsured Moto Bodily Injury $300,000/accident - $100,000/person
Underinsured Moto Bodily Injury $300,000/accident - $100,000/person
Comprehensive Loss $500 deductable
Collision Loss $1000 deductable

Premium $412.38/6 months = $68.73/month

My wife's car is similar to mine and similarly insured. 

What changes/considerations should we make for our coverage?  Thanks all you like-minded folk!

[Rube]

Shop it. I have always used an independent agent with no set affiliation. I also have generally bundled HO and auto.

When you shop this you need an apples to apples comparison. Your current liability and property coverage would be stated as 100/300/50

I have a 10 year old car and 4 year old car. 500/500/100 $500 ded on collision and comp. Probably should drop coll on the 10 yo car. $500k un/underinsured.

$1220 annually with 5% full pay discount. Plus a $1M umbrella for $280 or so per year.

Not super mustachian but I grew up with an attorney and am married to one.

I see you have a $1000 deductible on $10,000 PIP. For comparison mine is full coverage with no deductible. I was rear ended in November and wanted to get checked out and had to pay a $100 deductible which was too much. I always had 0 before. Why have the coverage? My old agent apparently thought that deductible was a good idea. He was retiring anyway so I dropped that agency (was with them since I was on my dad's ins. at 16) and found another agent with that same company. He got us a better policy and saved us money.

BTW, it's good to educate yourself on this so you know what you are buying and the agent knows they can't pull the wool over your eyes. Most people only look at the price. 

The answer to is it enough is how much can you afford to lose? What about attorney's fees? As our net worth grows I will up the umbrella to $2M

[Pat96714]

Thanks Rube.  It's nice to have something to compare to.  I will shop around for sure.

I do need a bit of an education on an umbrella policy.  I don't believe that came up when I was speaking with my current insurance agency.

[brewer12345]

Yes, get an umbrella policy for at least a million.  The umbrella policy will require certain minimums on your primary policies.

[Gimesalot]

A few years ago, a financial planner, (he did not sell insurance), explained it this way:

As a young professional, your largest asset is your future salary.  So, that is what you need to protect.  For example, at $60k a year for the next 40 years, the value of your salary is $2.4 MM.  If you end up in an accident that is very destructive, you can be sued for much more than your current assets.  This will mean that your future earnings can be garnished to pay the judgement.

 

[BlueMR2]

Yes, get an umbrella policy for at least a million.  The umbrella policy will require certain minimums on your primary policies.

I saw yesterday on an auto site where a Dodge Dart owner ran a red light and smoked a Ferrari F40.  Not something you think about normally, but that's the worst case one should prepare for.  A friend's Dad has an F40 and it's currently valued at $1.1 million.  One mistake and car crash might leave you on the hook for over a million personally if you've got "state minimum" insurance...

[Prob8]

Check out MMM's post about insurance here:  http://www.mrmoneymustache.com/2011/06/02/insurance-a-tax-on-people-who-are-bad-at-math/

I personally carry a $1 million umbrella which, as brewer stated, will require increased underlying coverage minimums.  This will also mean higher premiums.  You will have to assess whether you think the relatively small risk of incurring major liability is worth the higher premiums.   

That's an expensive house you have.  You should make sure it is titled "tenants by the entirety" if your state allows that type of deed.  This will offer protection if one spouse is sued.

[MissStache]

I would up your Propery Damage limits to 100K, at least.  50K is gone in an instant if you damage two new cars, or hit a building. 

Personally, I've got 300/300/300 limits, but I also work in insurance and it has made me incredibly risk-averse.