The Stealey Law Firm Blog

Tuesday, December 20, 2011

Do You Know What Kind of Auto Insurance You Have?

Atuobile Insurance: In my practice, I’ve discovered that many people are confused about their car insurance.  They have no idea what coverage they have or, for that matter, for what purpose each type of coverage is designed.  So I thought it might be helpful to give you a primer on car insurance and coverages.  Of course, I’m not an insurance guy.  If you have specific questions about your policy and your coverages, contact your insurance agent, unless your agent is, say, a Gecko or some virtual character that you’ve never met or never communicated with, in which case, good luck getting answers to your questions…

Liability coverage:  Liability coverage is designed to cover you or anyone driving your vehicle in the event of bodily injury or property damages resulting from an accident in which you or the driver of your car is at fault.  This coverage is usually expressed like this:  20/40/10, meaning $20,000 per person of bodily injury coverage; $40,000 per accident of bodily injury coverage; $10,000 of property damage coverage.  The State of West Virginia mandates that you carry 20/40/10 of liability coverage.  But for most people, that’s not sufficient.  Consider carrying at least 100/300/50 of liability coverage if you can reasonably afford it.  If you have substantial assets to protect, then you should carry more insurance than that. 

Uninsured motorist coverage:  Uninsured motorist coverage protects you, your family and the occupants of your vehicle in the event of an accident caused by another driver who has NO liability insurance coverage.  Again, coverage is often expressed in the same fashion as liability coverage, that is, 20/40/10, meaning $20,000 per person of bodily injury coverage; $40,000 per accident of bodily injury coverage; and $10,000 of property damage coverage.  Again, 20/40/10 is the state minimum.  First of all, if your car is worth more than $10,000 and you’re carrying only $10,000 of uninsured property damage coverage, then you’re in trouble.  For example, if you own a $15,000 vehicle, then you’re $5,000 in the hole, even if your company pays you the limits under your policy.  Second, if you routinely transport a number of people to and from work or school, and you carry only 20/40/10 of uninsured coverage, then you’re vastly under-insured.  Again, this is an important coverage, and it is typically not very expensive coverage.  You should buy what you can reasonably afford.

Underinsured motorist coverage:  Not to be confused with “uninsured” motorist coverage, “underinsured” motorist coverage protects you, your family and the occupants of your vehicle in the event of an accident caused by another driver who has SOME liability insurance, but not nearly enough to pay all the damages he/she caused.  For instance, another driver carrying 20/40/10 of liability coverage plows into your brand new SUV that you just purchased for $32,000.  He has $10,000 of property damage liability coverage.  So you’re now $22,000 in the hole, unless you have underinsured motorist coverage to protect you.  Or, if that same driver inflicts $100,000 worth of damages and injuries to the passengers in your vehicle, you and your passengers are already $60,000 in the hole, as he has only $40,000 total of bodily injury liability coverage, and your total damages and injuries amount to $100,000.  For some reason, people don’t carry nearly enough underinsured motorist coverage.  I really don’t understand why.  Because the law mandates minimum coverage in order to drive a car on the highway, most drivers obey the law and buy at least the minimum liability coverage of 20/40/10.  So the odds of being hit by somebody with SOME BUT NOT MUCH coverage far outweigh the odds of being hit by somebody with absolutely NO insurance.  In any event, this is an extremely important coverage that is often misunderstood and overlooked.  It is a good idea to carry at least 100/300 of uninsured and underinsured bodily injury coverage.  And it is a good idea to carry at least as much uninsured and underinsured property damage coverage as your car is worth.

Medical payments coverage:  This is coverage that pays for medical expenses for you, your family and anyone riding in your car who is involved in an accident, regardless of whose fault the accident is.  Some people don’t carry enough of this insurance, and some people carry way, way too much.  How much medical payments coverage (med pay) you carry should depend on how good your health insurance coverage is.  For example, if you have no health insurance coverage, then you probably want to carry a higher limit (maybe $25,000 or $50,000) of med pay coverage under your auto policy.  The reason is obvious…  If you are badly injured in a car wreck and have no health insurance, you may have difficulty getting the treatment you need, unless you carry med pay coverage under your auto insurance policy.  By the same token, if you have great health insurance, then you might only need to carry a minimum (say $5,000 or $10,000) of med pay coverage under your auto policy, just to take care of deductibles, co-pays and medical expenses that might not be covered under your health insurance policy.   I ran across a client of mine the other day who wasn’t rich, by any means, but she had great health insurance coverage.  Despite that, her car insurance company sold her $100,000 of med pay coverage.  Yet, she had absolutely no underinsured motorist coverage under her policy.  Thus, she was double insured for medical expenses (and only one insurance company would have ended up paying her bills), and grossly under insured for claims of lost wages, pain and suffering, loss of enjoyment of life, disfigurement, etc., if she were to get hit by a driver carrying only the minimum liability limits.  That makes absolutely no sense.   So, in summary, the amount of med pay coverage which is purchased under an auto policy somewhat depends on the amount of health insurance coverage that’s available to family members. 

Other coverages:  There are other coverages that can be purchased such as collision coverage (in case you cause an accident or run your car into a tree or something), comprehensive coverage (best examples of when this coverage comes into play are a broken windshield from a rock, or broken wheel and flat tire from a big pothole)and rental car insurance (paying you so much per day for a rental car if yours is out of commission due to an accident).  Collision and comprehensive coverages are often expensive, but necessary, if the car is worth a lot of money, or if there is a bank loan on the car.  I’ve always thought that rental car coverage was a good idea.  Towing is another matter.  Why pay for towing if you’re a member, say, of Triple A, or some other auto club whose membership covers towing charges?

Again, the information contained in this blog is only general in nature.  You should talk to your agent (or animal or virtual representative) about your specific needs.  But if nothing else, I hope this blog illustrates the importance of making good decisions relative to your insurance coverage in order to get maximum protection for the least amount of money.  Happy motoring…

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The Stealey Law Firm is based in Parkersburg WV and serves the surrounding counties of Wood, Jackson, Wirt, Roane, Doddridge, Pleasants, Tyler, and Ritchie in the legal area of Personal Injury.

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