Whether you’re a freshly-minted college graduate or are in the midst of climbing the corporate extension ladder, finding the right car insurance for your situation in life is an important part of financial fitness. From aspiring young professionals still living with their parents to financially independent young millennials who are, themselves, parents, it’s important to have the right automotive coverage. Investopedia reports that only 64% of Americans ages 18-29 have insurance. Let’s hope you’re not part of the 36% that’s going without!
Let’s face it, unless your daily ride is a 10-speed or you’re Lyft’s biggest customer, odds are you find yourself behind the wheel pretty regularly. In fact, get a load of these statistics from the Bureau of Transportation:
- 87% of daily trips take place in personal vehicles.
- 91% of people commuting to work use personal vehicles.
- Americans take 1.1 billion trips a day — four for every person in the U.S.
- U.S. daily travel averages 11 billion miles a day — almost 40 miles per person per day.
We totally get it: car insurance isn’t nearly as fun as a new iPhone or skating lessons for Stella. Accidents happen, though, and it’s good to be prepared.
Auto Insurance is Required by Law in TN
We can’t state this clearly enough: If you drive a car (and the statistics say that you do), then you need auto insurance. Not only is insurance legally required in Tennessee, but it offers an important layer of personal liability protection. Starting this year, in fact, uninsured drivers in Tennessee must pay fines and may even risk losing their vehicle’s registration if they cannot provide proof of insurance.
Still, Not Every Tennessean Has Auto Insurance
Even though having car insurance is the law, Tennessee has one of the highest proportions of uninsured drivers in the country. Shockingly, 20% of the state’s drivers take to the roads without insurance. There’s no sense in playing the odds: it’s absolutely critical to carry adequate uninsured motorist (UM) coverage. UM covers you if another driver (who doesn’t have insurance or who doesn’t have adequate insurance) injures you. UM will pay for medical bills, pain and suffering, out-of-pocket expenses, lost wages, loss of future earning capacity, funeral expenses and more. We recommend limits that match your liability limits.
State Minimums Aren’t Enough
Minimum state limits of liability are $25,000 for each injury or death per accident; $50,000 for total injuries or deaths per accident; $15,000 for property damage per accident.
However, one of the biggest mistakes you can make is to choose a plan based on the Tennessee’s minimum liability requirements. Why? Because it’s penny wise and pound foolish. In fact, there’s often a huge discrepancy between state minimum and the actual cost of the accident (especially if it’s an accident in which someone is injured.) If you choose a liability limit that’s too low, you risk high out-of-pocket costs or even wage garnishment if claims exceed your limits.
Ridesharing May Be Risky
Speaking of Uber and Lyft, although ridesharing or driving for a food delivery service like OrderUp may sound like a great way to make some extra cash on your terms, many policies will not cover you while you’re carrying paying passengers or using your vehicle for commercial purposes.
Talk to a licensed broker to better understand the different levels of coverage and to find coverage that’s right for you, and will protect your assets in the event of an accident.
Gap Insurance on Your Leased Vehicle
If you’re leasing a vehicle, you may need gap insurance which would cover the difference between the value of the vehicle and the amount you owe on the lease. Some dealerships include this coverage, so be sure to read your contract carefully. If you’re not sure, we’re happy to take a look at your contract to make sure you have the right coverage.
To learn more about auto insurance, read our article on the Fundamentals of Car Insurance.
