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Noyes, Hall & Allen Blog

Avoiding 4 Big Car Insurance Mistakes – Coverage Advice from a Maine Insurance Agency

February 17th, 2010     Noyes Hall & Allen

When you buy Maine auto insurance, you choose liability coverage to insulate your assets from damages you might owe to others after a car accident. Your policy also includes uninsured motorist coverage, usually at the same limits.

Here are 4 auto liability insurance mistakes our Maine insurance agency works hard to save you from – and how to avoid them.

1) Meeting State Minimum Limits.

Buying Maine State Minimum liability insurance limits is like getting a “D” on your report card. You pass, but just barely. Maine’s minimum requirements ($50,000 per person / $100,000 per accident for Bodily Injury, $25,000 for Property Damage) are comparatively strict – higher than every state except Wisconsin. That’s good, right?

Think about what that might need to pay for.

Bodily Injury coverage pays people you might injure for their

  • Hospital & Doctor Bills
  • Lost Time from Work
  • Physical and Occupational Therapy
  • Pain & Suffering
  • Attorney’s Fees

Those expenses can easily top $50,000 for a moderately serious accident. What happens if you have a REALLY serious crash?

2010 Subaru Legacy: MSRP $25,000

Maine’s minimum property damage limit is $25,000. Still think that’s enough?

Property Damage Liability coverage pays for damage you cause to:

  • Other vehicles
  • Property in their cars (computers, golf clubs, etc.)
  • Buildings
  • Utility poles, guardrails, etc..


2) Forgetting that Insurance pays to defend you.

insurance does more than pay for damage and injuries you cause. It also pays for legal expenses – unless your liability coverage runs out. As long as you have insurance limits left, your insurer finds, hires and pays an attorney to defend you. The beauty of this is that your legal fees do not reduce the amount of coverage available to pay injured parties.

Plaintiff Attorney Ad

Still think $50,000/$100,000/$25,000 is enough?

If you watch TV in Maine, you’ve seen lots of ads urging injured Mainers to call a lawyer so they can “get what they deserve”. If you get in an accident without insurance – or, if you cause more damage than you bought insurance for – you’ll have to hire your own lawyer to defend yourself. With your own money. And, if you’re found liable, you’ll have to pay the damages on top of that. With your own money.

3) Keeping the Same Limits Year After Year

Insurance is the only thing between your assets and a liability judgement. The higher your net worth, the higher your liability limits should be. When you bought your first car, your net worth might have equaled the contents of your pocket. But gradually, you got ahead of the bills, made a little more money, maybe bought a house – and your net worth grew over time.

If you cause more damage than you have insurance, guess where the court will look for restitution? Your home equity, your savings, investments, and so on. So make sure your liability coverage at least matches your net worth. Think about buying an umbrella policy to supplement your auto & home liability coverage. They’re cheap, and can be the difference between an unfortunate accident and financial disaster.

4) Ignoring the Danger of the Uninsured – or Underinsured.

Your car insurance policy also protects you against uninsured or underinsured drivers. If someone hits you – their fault – and they have no insurance, your policy acts as if they had the same limits you do, and pays for your bodily injury. Same thing if they had low limits, and you bought higher ones.

See where this is going now?

But wait. Maine car insurance is mandatory. The State requires it to register your car. So everyone’s insured, right? Not really.

An estimated 4% of Maine drivers are uninsured – and that’s the 2nd best rate in the country. The Insurance Research Council estimated that nearly 14% of U.S. drivers had no car insurance at all. And that doesn’t count the people who buy minimal limits.

So Mainers are relatively honest folks. But what about everyone else? What’s that nickname on Maine’s license plates again? Oh yeah…

Maine license plate - "Vacationland"

Most of our out-of-state visitors are from the northeast, right? Click on the map below to enlarge it, and you’ll see that of the 10 states within an easy day’s drive of Maine, 2 do not require drivers to buy insurance AT ALL. Six more require per person Bodily Injury limits of $20,000 or less.

Map of uninsured motorist laws by state

Think you might want to increase your car insurance? Talk to a good Maine car insurance agent – like us for example.

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There are 4 comments for “Avoiding 4 Big Car Insurance Mistakes – Coverage Advice from a Maine Insurance Agency”
  • Mick thinks:

    This is such a good and relevant article. I reviewed my families last year and realized we were at 25/25. The area I live in is sometimes called Beverly Hills North because Bill Gates lives in our town, along with many a Microsoft millionaire. BMW’s and Mercedes are like Fords and Chevys in any other state. I probably see a +100,000 car every day commuting to work. We took our limits to 100 / 300 and it cost so little to up that coverage. Like the article says sometimes we get what covers us when we own nothing…but 15 years later you’re setting with a home, 2 cars, retirement and savings. I bet there are tragic stories out there of families ruined from having to pay out of pocket.

  • noyeshallallen thinks:

    Thanks for the comment, Mick. Although Maine is generally less affluent than the area you live in, we have a very high rate of millionaires per-capita, thanks to the high percentage of seasonal and secondary homes. It makes sense not to gamble your net worth on the chance that you’ll hit a ’98 Subaru, which is about all the damage that state minimum limits pay for.

  • Maine’s Low Car Insurance Rates Lead the Nation « Risk e-business thinks:

    […] Theory We think there’s something else behind the numbers: The rest of the country’s high percentage of uninsured drivers, and pitifully low minimum liability limits, and the number of people without health […]

  • Jacques Lanier thinks:

    You’ve done it once more! Superb post.

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