Why Choosing Cheap Liability Insurance Can Be a Costly Mistake

While price remains the primary consideration for most drivers when selecting liability insurance, choosing the cheapest option could backfire in the event of a serious accident with health consequences. This is because most cheap liability insurances have low coverage limits that may not be sufficient to compensate for the damages caused. According to Milan Káňa, a spokesperson for Kooperativa, every year the company deals with several insurance claims where the total damages exceed 35 million crowns, which is the basic limit in liability insurance. Káňa recommends that drivers choose higher limits, specifically 100 million crowns for property damage and 100 million for health damage.

While higher limits may increase the final insurance price, the difference is usually only a few hundred crowns per year for the same vehicle capacity. However, many drivers prioritize price when selecting liability insurance, with only a quarter of them interested in the actual extent of coverage and the offer of assistance services, according to a survey conducted by the Czech digital financial advisory company FinGo.cz. Only 29 percent of clients are interested in additional insurance and specific services. However, lower coverage limits can lead to inadequate compensation for severe injuries in the event of an accident.

Moreover, the amounts paid out from the insurance of culprits of traffic accidents as compensation for the consequences of health damage to victims are increasing, with the average salary reaching 998 thousand crowns last year, 71 thousand more than in 2021, according to Vindicia, a company specializing in compensation recovery. For example, a young female motorcyclist who did not give priority to a driver of a passenger car received 1.8 million in compensation after being seriously injured, losing two months of memories and several teeth, and partly losing the sensation in her hands. She now suffers from psychological problems and is afraid to get into a car, let alone a motorcycle.

In summary, while it may be tempting to choose cheap liability insurance to save on premiums, drivers should be aware of the limitations of low coverage limits. Choosing higher coverage limits may increase insurance costs by only a few hundred crowns per year but can provide significant financial protection in the event of a severe accident with health consequences.

Article by Prague Forum