Ensure that Your Insurance Covers You

Everyone should have auto insurance. Yes, even if you don’t drive regularly. Everyone. I’ve blogged about how people who are passengers in other vehicles and find out the hard way the driver causing the crash is not insured sufficiently to compensate them for their injuries.

Since I continue to bug you about getting insurance, and as much coverage as you can afford, why don’t we take a brief dive into what is actually covered by an automobile insurance policy.

Declarations Page 101—Liability Coverage

When you purchase insurance, you receive a listing of coverage and covered limits from your carrier. This is commonly known as a declarations page or “dec page.”

Illinois is a mandatory insurance state, so the minimum amount you can purchase coverage for is $25,000 per person per incident and $50,000 per incident combined. As discussed in many prior blogs, this is ridiculously inadequate in almost all situations.

This is the part of the policy known as liability coverage. Liability covers you for incidents in which you are partially or completely at fault. An example is you are reaching for your coffee and don’t stop in time to avoid rear ending the vehicle in front of you. That crash causes injury to the occupants in the vehicle in front of you and a claim is filed against you.

Your liability portion of your policy will cover you for any claims caused by your own negligence up to the amount stated. If your limits are $250,000/$500,000 and you rear end a vehicle with four occupants and all are injured, the most any one of them can recover is up to $250,000 and the total amount available for the remainder is up to $500,000. If one occupant collects the $250,000, that leaves that same amount to be apportioned amongst the remaining three occupants.

The other nice thing about liability coverage is that if you do get sued, you simply turn it over to your carrier and it hires counsel to defend you all the way to trial for no additional cost. You can turn it over to your insurance and just about never have to worry about it again.

Liability coverage will also cover injuries to any of your passengers caused by your negligence. Think about your nascent 16-year-old driver with her two friends in the vehicle. As drivers that age often make mistakes, it should make you feel a lot more comfortable knowing that those anticipated errors are covered.

Or let’s say you pick up your son from tennis practice after school. You just had a long day of meetings and you are not at your attentive best, and you crash into the car in front of you. Your son’s injuries would be covered by your liability policy.

Dec Page 102—Collision/Comprehensive

Collision coverage protects you for any damage to your vehicle caused by another vehicle or object whereas comprehensive covers other damage to your vehicle, such as a tree limb falling on your car, hail damage, or the like.

There is a deductible amount baked into the policy, so make sure you tailor it to your finances.

If you have an old vehicle and don’t have much money, you may want to set the deductible a bit lower. However, think about it differently, in that the vehicle you drive is very valuable to you despite it having almost no value on the open market. You won’t have money to replace it if it is damaged, or pay for repairs yourself, so make sure you can keep driving it on your budget.

Similarly, if you have a new, expensive vehicle on which you owe no money, you probably want a higher deductible, because you can absorb it. But you may also wish to talk to your insurance broker about special insurance that sets a specific value on your vehicle should it be totaled.

Finally, if you own a vehicle on which you have a loan, you should always purchase gap insurance. This will cover the remaining balance on your loan if your vehicle is declared a total loss.

Many people make the mistake of not purchasing collision or comprehensive coverage for old “beaters.” Big mistake. As I pointed out above, that “valueless” car of yours gets you to work, gets your child to school, and allows you to grocery shop. Where would you be without it? With what money would you replace it?

Dec Page 103: Uninsured (UM)/Underinsued (UIM)

If you have read my blogs, you are tired of hearing me talk about UM and UIM. Too bad. I’m back again to remind you how crucial it is to have these coverages in the largest amounts possible.

UM covers incidents where the other person who causes a crash is not insured, has lapsed insurance, or is not a covered driver. Just because the law says everyone must be insured and have a valid license doesn’t mean everyone complies. You would be shocked at how many drivers have no coverage at all.

UIM covers situations where the limits of the person causing your crash are lower than your own and inadequate to compensate you for your injuries (or your passengers or members of your household!). While I have written about these situations frequently, the standard example is where the driver of the vehicle that rear ends you has $25,000 coverage limits. Your injuries include a fractured ankle that requires surgery. Surely $25,000 won’t even cover some of your bills, let alone pain and suffering, loss of a normal life, lost wages, or future pain and suffering. But if you have $500,000 UIM limits, you could collect the $25,000 from the other driver’s carrier PLUS up to an additional $450,000 from your carrier. And it is unlikely your rates would increase since it wasn’t your fault.

In other words, if you ever plan to ride in a vehicle, drive a vehicle, or any of your household members plan to do those things—ever—you should have as robust limits for uninsured and underinsured motorist coverage as possible. One million dollars is not out of reach, nor is it overkill.

You should automatically have these coverages. The limits of your liability policy will be the same as that for UM/UIM.

Unless you decline to have coverage in writing, you will automatically have UM/UIM if you have liability coverage. While it is possible to have coverage less than your liability limits, it makes no sense to do so. In some instances, it is possible to actually have higher UM/UIM limits.

Dec Page 104: Medical Payments/PIP

This is also a topic I have touched upon often. The basics of Med Pay is that your medical bills will be paid dollar for dollar up to the limits of your policy. If you have $25,000 in med pay coverage (also known as PIP), but don’t have health insurance, your medical bills will be paid up to $25,000. That is some serious peace of mind.

Dec Page 105: Umbrella

An umbrella policy sounds like something only wealthy people have, but it is not. The cost of a $1,000,000 umbrella may be less than a few hundred dollars a year. Umbrella policies cover additional damages you cause. So if you had an auto policy limit of $250,000 and cause serious damage to the driver you rear end, that driver can recover the $250,000 PLUS up to the additional amount of your umbrella policy ($1 million).

The alternative is to risk your house, your assets, and your sanity by not purchasing an umbrella policy.

Contact Chicago Personal Injury Lawyer Stephen Hoffman

As in all cases involving injury and potential liability, if you have been hit by a vehicle immediately get medical treatment, report the crash to police and your own insurance company, and contact a lawyer with expertise in your type of case, such as bicycle accidents or pedestrians hit by cars.

If you've been in an accident and have questions, contact Chicago personal injury attorney Stephen L. Hoffman for a free consultation at (773) 944-9737. Stephen has over 30 years of legal experience and has collected millions of dollars for his clients. He is listed as a SuperLawyer, has a 10.0 rating on Avvo, and is BBB A+ accredited. He is also an Executive Level Member of the Lincoln Square Ravenswood Chamber of Commerce.

Stephen handles personal injury claims on a contingency fee basis, which means you don’t pay anything up front, and he only gets paid if you do. Don’t wait another day; contact Stephen now.