This blog series addresses the legal issues that continuously give my Clients the biggest problems; and, provides the “right moves” to avoid them.
Are you in good hands, or will you be dropped? What kind of “neighbor” will you be treated like when you ask your insurer to pay a claim to you or someone else, rather than sending money to them in the form of premiums. How much insurance do you actually need? What is “UM” or “Med Pay” coverage, and does any of this even matter? Oh yeah…..it matters!
When it comes to car insurance, you can be taken for a ride if you are not careful. First of all, an “agent” is just an insurance salesman who make a commission on your policy. What I mean is….if you ever have an actual question or concern relating to coverage or claims, they will punt to the “coverage” people or the “underwriters.” (Something they hope you never find out) There is nothing wrong with skipping the salesman and getting coverage online. Either way, the key is to understand what car insurance really is so that you can make informed decisions on what to purchase.
Car insurance is nothing more than a contract. You promise to pay your premiums; and, your insurer, in return, “covers” you in certain situations. Although most people never actually read their car insurance policies, they definitely should. The policy, itself, sets out the situations of coverage so that you can file a claim; or, alternatively, situations where the insurer will cite to an “exclusion” to deny coverage and a claim. When coverage applies, it only extends to the “limits” of the policy.
Policy limits are such a common phrase for something that is very uncommonly understood. For instance, do you know what the limits 25/50/25 actually mean? If not, don’t feel bad….the insurance company wants you to be as confused as possible! If you don’t believe me, look at the way they write their limits and their policy. Who do you ask for clarification...the agent who works for them? Nope - just keep reading.
· 25/50/25 “liability limits” means that if you cause a wreck, your insurer will pay $25,000 max for injuries to each person (up to $50,000 for two people) and $25,000 for property damage
· Since 25 grand would barely cover one night in the hospital for someone you injured or for half the value of most cars sold today, it is simply not enough. Georgia is way behind the curve on this issue, as compared to other states such as Arkansas, which require twice the Georgia limits. If you are wondering why folks are allowed to legally drive without sufficient liability insurance coverage for an accident, you may want to ask your local politicians who make the rules “for their constituents.” While you have their attention, ask them if they are attorneys who make their living defending car wreck cases for insurance companies when they are not in the Capital; and, sponsor bills to benefit the same companies when they are.
· “Med Pay” coverage, depending on how much you purchase, pays for medical treatment no matter who caused the wreck. This is great when your medical insurance policy has a deductible of 5 grand, for instance, and you buy the same amount of Med Pay.
· “UM” (Uninsured Motorist) coverage is truly important. If someone insured at the minimum legal limits causes a collision and your injuries are $100,000, where is the other $75,000 coming from? That is where UM coverage kicks in; and, when it does, that is a beautiful thing. First, in order to make a UM claim against your own insurer,
you have to “exhaust” the other driver’s entire liability policy. Next, there are two kinds of UM coverage: a) offset and b) add-on. Offset sucks - no explanation needed. Get add-on even if it is a bit more expensive because that will ensure that all of your UM coverage is actually available for you to use.
· Claims are handled differently by every insurer; and, depending on which insurer you choose, they may disregard your interests to allow you to be sued if you cause a wreck rather than pay the claim in good faith. Ask around and find out which insurers actually treat the interests of their insured as they would treat their own, which is actually what the law requires.
There is no right answer applicable to everyone on what car insurance to purchase; but, there is definitely a wrong one. Whether a wreck you are in was your fault or not, or whether you or someone else was injured, insufficient coverage is a recipe for disaster. I see this play out all the time when good people who were not at fault are horribly injured by those carrying the minimum limits of liability coverage; and, in the absence of a solid UM policy, they are left with 6-figure medical bills and permanent injuries that were not even their fault!