These days not many people know what their car insurance actually covers, let alone what it means. Did you know that 1 in 4 cars on the road is uninsured. With money being a problem for everyone, that number is rising. Knowing what your “limits” are in insurance can save you thousands of dollars and actually protect you. If you are just paying for the bare legal minimum, you are barely covering the other driver, and not yourself. The bare minimum amounts change in most states, but in every state it is not enough. For example in Montana, the bare minimum is $25,000 per accident. That means if you hit another person, and it is your fault, the company will pay them up to $25,000 to settle their claim. However, if they are badly hurt, that may not be enough money. Did you know that if that other person’s claim is worth more than your $25,000 limit, they can still sue you in civil court for any monies over that amount? They can, and will.
As a personal injury attorney, people come in my office every day that do not know what kind of coverage they are paying hundred of dollars for. And it is usually bad coverage. Call your insurance agent and tell them you want a copy of your declarations page. This is an easy to read form that tells you what your coverages are, if you know what they mean that is. Most people don’t. And why would you, nobody taught us this stuff in school, but they should have. If everyone that came into my office had adequate coverage, they would each be walking away with thousands, if not tens of thousands of more dollars after they are involved in a crash. Most don’t figure this out until it is too late. Don’t expect your agent to tell you what this stuff is used for, as they don’t make money on coverage that you can use, that puts money back in your pocket. But I will.
Bodily Injury Limits are the coverage limits that the company will pay The Other Guy, when he hits you or you hit them. This is what I previously referenced as the bodily injury limit that we all must carry. If you hurt someone and they want to settle for more than your bodily injury policy limit, you are personally on the hook. If the case goes to court and they get a judgment against you that is more money than your limit, they will go after you. I know, because that is what I am forced to do sometimes for injured people. You should try to make sure this coverage is at least $100,000 per person. More would be better, but that is a good starting point to start protecting yourself. It is a rare claim that would exceed $100,000 in settlement value.
Next up is the most important coverage for YOU and your loved ones. That is Uninsured and Underinsured motorist coverage. Some states and companies combine this coverage and some have it separately, so be careful and read you policy language.
Uninsured motorist coverage or UM, covers YOU against an uninsured driver. This policy limit, is the maximum that YOU can recover from your company if an uninsured driver hits you and injures you. What is the maximum amount of coverage you think you want to cover yourself for when you know 1 in 4 cars out there is uninsured? Again, I suggest at least $100k, and hopefully more if you can afford it.
Underinsured Motorist Coverage or UIM is a great coverage that is again for you. This coverage kicks in if someone else hits you, has insurance, but has minimal coverage. For example, if someone hits you and you are seriously injured. If you have a claim that is worth $50,000, but the other guy only has $25,000 in coverage, your Underinsured motoris coverage kicks in money to you. You get his $25,000 and your Underinsured adds whatever amount you have coverage to. For example if you have $100,000 in UIM, you have $125,000 available to you for your claim. That is alot better than only his $25,000 policy and having to try to sue him for the rest. This is one of the best coverages you can have to protect yourself from a very serious car injury, I suggest as much as you can afford.
One of the least understood and least purchased coverages that is one of the most important is Medical Payments Coverage, or Med Pay. I suggest at least $25,000 per accident, more if you can. If you are in a car accident, it is vital that you have this. This coverage pays your medical bills regardless of who’s fault the accident is. If you hit someone and it is your fault, and you are injured, this still pays your medical bills, and you don’t have to pay it back. It doesn’t wait for Medicare approval, etc, it pays them, period. Some companies put time limits on what they will cover so read your policy carefully. If someone else hits you, this still pays your medical bills (not theirs), even though their insurance company owes you for your injuries. This is free money that you don’t pay back. It is easiest expained in a real world example:
John hits you and it is his fault. You are injured, and ou incur $25,000 in medical bills (yes, that is easy to do these days). Lets say you want to settle for $50,000 ($25,000 for medical bills and $25,000 for pain and suffering) from John’s company (that number doesn’t change whether you have med pay or not). Now, if you have $25,000 in med pay coverage. Your med pay pays the bills first, and you don’t pay that back to them. Then John’s company pays you $50,000. With med pay, you have essentially made a $75,000 settlement because the $25,000 for medical bills is paid by both your med pay and his company. You see $50,000 in your pocket.
If you don’t have med pay, only Johns company pays the medical bills. That means you only see $25,000 in your pocket, because the rest went to pay your bills.
This coverage costs only dollars per month, and as you can see, can put tens of thousands in your pocket. If you want to talk more about coverages, let me know, and I can help you find a good coverage package for you.
Marty is a former criminal prosecutor in the Cascade County Attorney’s Office and now uses that experience to defend those accused of crimes. A University of Montana School of Law graduate, Marty focuses his practice on personal injury and criminal defense and is a premier DUI defense attorney. He is also well versed in the insurance claims industry and has negotiated significant settlements with nearly every major insurance company.