How to Proactively Prepare Financially for an Auto Accident

Being injured throws a massive wrench into your plans. Car accidents can occur suddenly and can cause such severe damage you either can’t work for months or the rest of your life. Injuries sustained in a car accident are no laughing matter, and though you cannot realistically prepare for a car accident when the risk is there every second you are on the road, you can be proactive. 

One of the critical areas you will want to be proactive in is with your finances. 

1. Have an Emergency Savings Fund 

You should always have an emergency savings fund that you don’t touch. This fund should ideally be enough to cover all your costs for at least three months, with the ideal timeframe being six. Why? There are so many instances where your luck can turn. Lose a job, suffer from an injury or illness, or even just an unexpected repair cost. Emergency funds are designed to help you financially during a tricky spot. 

If you don’t already have an emergency savings fund or your fund isn’t enough to support you and your family for any realistic period, you need to prioritize it. Take out a percentage of each paycheck starting today and put it into your savings. Keep doing this until you have enough to cover these costs: 

  • Rent 
  • Food
  • Utilities 
  • Transportation 
  • Insurance premiums 
  • Pension 

Save to cover costs for at least three months, and ideally keep saving to cover six months’ worth of living costs or more. 

2. Ensure You Have Uninsured and Underinsured Driver Coverage 

One easy way to cover yourself financially in the event of an auto accident is to go through your policy. If it does not include uninsured or underinsured driver coverage, get that immediately. Even though it is often illegal not to have auto insurance when you drive, it is estimated that nearly 1 in 8 American drivers do not have insurance. More still will be underinsured, meaning you won’t get the payout to cover your damages. 

Having uninsured and underinsured coverage means that even if such a driver were to hit you, your own insurance policy would cover the remaining costs. 

3. Know the Steps to Take Following an Accident 

Always know what to do in an accident and ensure everyone in your family also knows these steps. From immediately calling for medical assistance and police assistance (even if you can “walk away” from the accident) to hiring a car accident attorney that specializes in cases just like yours ASAP. 

Your main goal after an accident is to recover, but the complexities of the law and dealing with insurance providers can be a nightmare. To avoid that hassle, click here to learn more about how car accident attorneys will help in your case.

4. Double Up on Insurance if Leaving Your State 

Finally, if you do leave your state, you will want to double up with some travel insurance. You might be leaving the care zone for your medical insurance, for example, which would mean being taken to a hospital not covered by your insurance coverage could result in massive costs coming your way. Travel insurance will provide additional coverage, so you don’t need to worry about this and won’t need to update your auto or medical insurance for a one-off trip. 

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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