How much is property damage coverage really worth?
I just received my renewal notice showing that my current property damage (PD) coverage is set at $200k, with a 6-month premium of $1,550 for two people.
I also got a quote from a larger insurance provider that offers a lower PD coverage limit of $100k, but their premium is only $950. I’m seriously considering making the switch. I still have bodily injury (BI) coverage of $250k per person and $500k per occurrence. What do you think?
When considering the value of property damage (PD) coverage, it’s important to weigh both the coverage amount and the premium you’ll be paying.
Coverage Amount: The $200k PD coverage you currently have is higher than the $100k offered by the larger carrier. If you were to cause an accident, the PD coverage pays for damage to another person’s property. If the damages exceed your coverage limit (in this case, $100k), you could be personally liable for the remaining amount. This risk is higher in areas with expensive vehicles or property.
Cost Consideration: The renewal premium of $1,550 for $200k PD coverage provides more protection, but it comes at a significant cost. The $950 quote with $100k coverage is appealing because it’s almost half the cost.
Personal Risk Assessment: Consider your own financial situation and how comfortable you would be if you were found liable for damages exceeding your PD limit. If you often drive in areas with higher property values or have assets to protect, it might be worth it to keep the higher coverage.
BI Coverage: Since you have a robust bodily injury (BI) coverage at $250k per person and $500k per occurrence, you’re covered well for injuries. However, if you were to switch to the lower PD limit, reassess if that could expose you to additional risk.
Ultimately, the decision to switch should hinge on your risk tolerance and financial situation. If you feel confident that the likelihood of incurring property damage exceeding $100k is low and you’re comfortable with the lower coverage for the savings, switching could make sense. Otherwise, sticking with the higher PD coverage for enhanced peace of mind might be the better route.