6 Things You Should Know Before Buying Automobile Insurance
I hate to think about how many times I have heard clients say, “I have full coverage” only to find out their automobile insurance policy is woefully inadequate. Unfortunately, this revelation usually comes after an accident when the policy’s shortcomings become painfully obvious.
1. THERE’S NO SUCH THING AS FULL COVERAGE.
The first thing to remember is that there is no such thing as “full coverage”. The term is a complete misnomer. There is such a thing as minimum coverage. Minimum coverage is the minimum amount of insurance required by law. The California Insurance Code states that every insurance policy must provide a minimum liability coverage of $15,000/$30,000. This means that if you are involved in an accident , and it is your fault, your insurance will pay a maximum of $15,000 to any person who is injured in the accident ( up to a maximum of $30,000 if more than one person is injured). Your policy will also include uninsured motorist coverage in this same amount, unless you have specifically agreed in writing not to have this coverage. There is no requirement that your policy have medical payments coverage or rental reimbursement coverage.
2. NEVER GIVE UP YOUR RIGHT TO UNINSURED MOTORIST COVERAGE.
In California, your automobile policy must include uninsured motorist coverage unless you decline that coverage in writing. Uninsured motorist coverage protects you in your own car, in another’s car, as a pedestrian, or on a bicycle if you are hit by an uninsured driver.
3. GET THE RIGHT AMOUNT OF COVERAGE.
So what type coverage should you have and in what amounts? Starting first with the liability coverage. I do not recommend that anyone carry the minimum $15,000/$30,000 limits. I frequently see automobile accidents where the medical bills alone are in excess of $15,000. If you are involved in such an accident, and have the minimum policy, the injured person will then look to your personal assets to satisfy his claim. Each individual ‘s financial picture is different, but I would not recommend coverage in any amount less than $100,000/$300,000. Many times higher limits are appropriate and can be obtained at rates, which are not significantly higher . If you are uncertain about how much coverage you should have, please feel free to call me and discuss it.
4. UNINSURED MOTORIST COVERAGE SHOULD EQUAL YOUR LIABILITY COVERAGE.
Each policy should contain uninsured motorist coverage/underinsured motorist coverage in an amount equal to the liability limits. Therefore, if you have liability limits in the amount of $100,000/$300,000 you should have unininsured/underinsured limits in the same amount. By having this coverage, you can be assured that if you are seriously injured and the other person has no insurance, or a minimum policy or small policy, you will be covered under your own policy for the full amount of your coverage. For example, I recently had a case where the injured person’s medical bills were in excess of $30,000.00. the person who caused the accident had a minimum $15,000/$30,000 policy. Since my client had an underinsured motorist policy in the amount of $100,000/$300,000, we were able to obtain a total settlement of $100,000 with his own insurance company. If the injured party had only the minimum policy, his settlement would have been limited to $15,000.
5. OBTAIN MEDICAL PAYMENTS COVERAGE.
In addition to uninsured/underinsured motorist coverage each policy should contain medical payments reimbursement coverage. This provides medical coverage for anyone injured in an automobile accident up to the specified limits. It even provides medical coverage if you are a pedestrian and hit by a car. I highly recommend this coverage whether you have other health insurance or not. The reason for this is that most health insurance has deductibles and co pays that can and do mount up following an accident. This coverage can be used to make those payments. Additionally, it may provide coverage for prescription drugs or specialists such as acupuncturists or chiropractors who may not be covered by your primary health insurance company. I would recommend medical payments coverage in a minimum amount of $5,000.
6. KNOW THE CLAIMS PAYMENT REPUTATION OF YOUR INSURANCE CARRIER.
It has been said that the insurance industry is the only industry in the world where the company does not want you to use its product. Some companies take this to an extreme and will go out of their way to deny claims, delay claims which should be paid immediately, or which unfairly evaluate the claims. A competent lawyer who deals with these companies on a daily basis can provide you with this information.
If you have any questions about your automobile insurance coverage, please feel free to call us or contact us online. I would be happy to discuss it with you to make sure that you have the right insurance when you get in an accident.