Are You Covered?

ARE YOU COVERED?

Accidents happen. Most of us assume that if we are involved in a car, truck, or motorcycle collision, we are covered. Many people assume that "full coverage" means what it says.

Insurance--A Brief Review

Take a close look at your insurance policy "dec page," which explains the declarations of coverage for various areas in your policy.

Collision covers you for property damage only. Remember that only increased levels of collision coverage really do you any good, especially if your vehicle is a total loss, since all it entitles you to is the fair market value of your vehicle less depreciation plus any scrap value. If you owe any money on the car, it is nearly impossible to replace it with this coverage. Look at options such as Agreed Upon Value or Gap coverage.

Liability is what covers you in the event you cause damage or harm. For instance, if you fail to stop in time on wet pavement and plow into the car in front of you, injuring the driver, you are covered up to a specific amount of money. The Illinois minimum is now $25,000.00 per person and $50,000.00 per incident, which does not go very far if serious injuries are involved.

Uninsured Motorist and Underinsured Motorist (UM/UIM) cover what happens if the other vehicle causing the collision is either uninsured or has very low limits that won't compensate you fairly for any injuries you sustained in the collision. These limits must be equal to or higher than your liability limits unless you waive that in writing.

Medical Payments, or PIP (Personal Injury Protection), covers medical bills you incur if you are involved in a collision, up to a specific monetary limit. It is not based upon liability.

DWW--Driving While Working

Do you ever use your personal car for work-related functions or trips? Have you ever looked at your auto insurance policy to see whether this activity is covered? Most, if not all, auto insurance carriers differentiate policies (and rates) for use of a vehicle for personal versus business or commercial use. Whether you are on your way to a business appointment, delivering items to a customer, or on a business trip, you should verify with your carrier that such activities are covered under your policy.

Many people discover that using their own personal vehicle for business purposes may negate policy coverage. Others discover that even seemingly obvious portions of their policy, like PIP/Med Pay, do not cover them while performing work activities or not using the vehicle insured on the policy.

Yes, that's right, you can be on a business trip, driving your rental car, and get hit due to no fault of yours. Yet you can be left holding the bag on your medical bills when your auto carrier determines that it will not cover you while you were working/out of state/not in your own vehicle, which are just a few of the "coverage exceptions" that insurance carriers employ to avoid paying claims.

This scenario is further complicated by the fact that most health insurance does not cover bills incurred as a result of an accident, work injury, or for which a third party may be liable.

Workers' Compensation

Does your employer consider you an employee? That seems to be a question with an obvious answer, but it often is not. Your employer, often in a quest to save money on workers' compensation insurance premiums, or for tax purposes, may actually classify you as an independent contractor. Alternately, there may be workers' comp coverage but your job description may be decidedly different than your actual job duties. If you get injured unloading 40 pound boxes of samples, but you are classified as a "salesperson," are you covered when your back goes out unloading those samples?

It is a good idea to sit down with your employer and get some answers about how you are classified, verify that you are covered under worker's compensation insurance, and also ask about their general liability policy.

Take Aways

What can you do to ensure that you will be covered in the event of an accident?

• Check with your insurance agent to determine for which activities/vehicles/locations you are covered.
• Revisit your coverage limits. Increase your policy limits. A great idea, especially if you own a home, have children, or maintain substantial assets, is to consider an Umbrella Policy for Liability. This may protect you in some of the "in between" scenarios noted above.
• Never purchase "full coverage" without asking specifically what it covers, walking through various situations, and verifying exclusions and limits.
• Sit down with your employer, the HR representative, or read your employee handbook, to review your work status, workers' compensation insurance, general liability insurance, and employee classification and job description. Note that your company credit card may even cover you for some issues connected with rental vehicles.