What does, “there’s a different between having insurance and being insured” really mean?

Don’t waste your money on minimum coverage. Here’s why,


Let’s start with the required state minimum liability and property damage limits. In 1967, the state of California decided to make liability and property damage required coverage. They set the limits at $15,000 per person, $30,000 per accident, and $5,000 property damage.

This means, if you caused an accident and injured someone, the insurance company would pay up to $15,000 for bodily injury per person. If you injured multiple people, the most they would pay is $30,000. They would also pay up to $5,000 in property damage.


In 1967, these limits were adequate. Now, let’s put this in perspective. In 1967 gas sold for .33 a gallon. In 1967, you could buy a really nice car for $5000. In 1967, $15,000 would have paid for a hospital stay of over two weeks.


Now let’s fast forward to 2011. Gas is $4.27 a gallon. The MSRP for a Smart Car is $17,690.00. We all know how expensive medical care is today, so to say the $15,000 required by the state will not cover much is a given.


The problem is, the state never adjusted the required coverage to keep up with inflation. If you carry the minimum coverage, you have insurance, but your not insured. You have way too much exposure. Remember, the insurance company will only pay up to the policy limits, regardless of how much damage has been done.


If you hit a $100,000 Mercedes, and have $5000 of insurance, where is the difference of $95,000 going to come from? Not the insurance company, I can tell you that.


Let’s take this scenario to the extreme. Let’s say the driver of the Mercedes is a surgeon. Because of the accident, he lost an arm and can no longer perform surgery. Will $15,000 be enough coverage?