The Incredible Shrinking Umbrella

Mar 19, 2010

The year was 1973. Some of the biggest hits on TV were Kojak, M.A.S.H., and The Waltons. Movie tickets cost $1.75 each. Gas was 40 cents a gallon, and a stamp was 8 cents.

Obviously, all those prices have gone up quite a bit in the last 37 years. But one very important number hasn't budged since 1973: the state minimum insurance requirement in Ohio, which has been frozen at $12,500 per person. Insurance is meant to "cover" you, and there's a reason one of the largest insurance companies, Travelers, chose an umbrella as their symbol. Insurance is meant to cover you in the event of a loss, but in Ohio this umbrella has been shrinking every year.

Now certainly, in the last several decades the amount of money you pay for insurance has gone up... and up... and up some more. But this absolute minimum protection has not changed despite the concerted efforts of consumer advocates in recent years.

A 1973 dollar is worth about $4.85 today. [So in the early '70's our state set the floor - the absolute minimum coverage needed to protect our citizens - at $12,500.00. Due to inflation, this has eroded to the equivalent buying power of about $2,500.00.] Just to keep pace with inflation, the state minimum limits should accordingly be at least $60,000.00. (This doesn't even factor in the spiraling cost of medical care.) Drivers with state minimum limits tend to be younger, higher risk drivers. Higher risk drivers are those drivers that are the most likely to cause an accident injuring you or your loved ones. The current bill to finally fix this situation is House Bill 23 which is before the legislature in Columbus. The insurance industry is a powerful force, but legislators respond to their constituents. Email your state senator and representative and tell them to support increasing the state minimum auto limits. You can find your legislators at http://www.legislature.state.oh.us/.

Bills have been introduced repeatedly over the last 10 to 15 years to raise those limits more in line with the rest of the country and with the reality of current prices. But the insurance industry fights this bill every time, claiming they will have to raise rates drastically to provide that level of coverage. Forgive us, but we think this is a pretty walleyed way of looking at things. As insurance consumers, we are constantly hit with increased rates most of which have nothing to do with our own claim history but have to do with increased cost of claims, etc. So the insurance companies get the benefit of increased premium dollars every year and yet this state minimum has not increased a penny in over three decades.

If the state minimum hasn't changed, the question policyholders should be asking is where are the monies we pay in inflated premiums going? Insurance companies have raised premiums of their policyholders with out increasing their risk regarding the amount they might have to pay under the coverage.

The only way to protect yourself from this shrinking coverage is to make sure you and your loved ones are covered by uninsured/underinsured motorist limits much higher than the state minimum. As a rule of thumb, uninsured/underinsured motorist coverage is the most important insurance coverage to you and you should have as much as you can afford on your policy. Talk to your agent; you'd be surprised how affordable it can be to increase this vital protection.

Willis & Willis Co., L.P.A.
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Akron, OH 44303

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