Every driver needs auto insurance, but few truly understand how much coverage they should get. To help make it more understandable, Executive Insurance & Financial Services CEO and President Anthony Sce III tells us what basic information drivers need to know when choosing a car coverage policy.
Having the right automobile insurance coverage has always been important, but that is more so especially because we have become such a litigious society. I don’t care if you had just a little fender bender, the first thing people are screaming these days is, “Oh my neck,” or “Oh my back.”
That is what is why it is so important to have adequate coverage on your automobile at all times. All you have to do is watch early morning or late night TV and you will see countless attorneys who say they are looking to represent people in these kinds of cases. But as always, your best protection against these types of lawsuits is to have ample liability limits with your automobile insurance.
Liability is what protects you if you get involved in a car accident and someone should sue you. However, the amount of liability coverage you need depends on the stage of life that you are in and how much of your assets you need to protect. Whether you should get anywhere from the minimum to the maximum, which is usually around $1 million, depends on those factors more than anything else.
Having spent years in the insurance industry, the biggest automobile coverage mistake that I see people making is being inefficiently covered — that is what is going to protect you should you get into an accident with an uninsured or underinsured motorist.
Unfortunately, sometimes clients are not advised about this uninsured and underinsured motorist coverage because this is where insurance carriers actually lose money. But basically, what uninsured and underinsured motorist coverage does is it protects you if someone who has no insurance or is underinsured hits you and ends up hurting either you or someone in your car.
Tons of people, unfortunately, are driving without insurance. If someone without any car insurance was to get an accident with you, and if you had only the minimum coverage limits — which is $25,000/$50,000 in coverage — then the maximum your own insurance company might pay out would be $25,000 to $50,000. If you or other people in your vehicle were hurt during the accident, though, then hospital bills alone could quickly rise past that mount.
Although everyone knows what an uninsured motorist is, there is some confusion about what an underinsured motorist is. To clear that up, an underinsured motorist is someone who is driving around with the minimum limits, which in New York is $25,000 per person or $50,000 per accident in insurance. Although that is legal, it isn’t smart.
To try and describe what would happen if you were to get into an accident with an underinsured motorist, I’ll put it like this: If I was driving around with $500,000 worth of coverage because I have assets to protect, but then someone hits me and we get in a horrific car accident, then not only would my car be totally damaged but I would also be in the hospital. If I was driving around with friends, then the two or three of us may all be in the hospital with serious injuries, let’s say.
So, to try and pay our doctor’s bills, we would need to go after the person who was driving the car that caused the accident, or his insurance company. However, since he is an underinsured motorist and only has $25,000 to $50,000 worth of coverage, there is a good chance that a small amount like that would not begin to pay the medical bills for a lengthy hospital stay for two or three people who needed surgeries and things like that. Surgery alone could be $250,000 or more.
By increasing my own uninsured and underinsured motorist coverage, though, I can begin collecting under my own insurance policy to pay those medical bills while I’m still in the hospital, to get my car repaired, and everything like that. That coverage would be used to pay for the bills of my friends who were injured in the car accident with me, as well.
Chances are, if someone is driving around with the minimum limits of coverage then he probably doesn’t have any assets that you can sue him for anyway. So this protects you in case you are hit by someone who is uninsured or underinsured — meaning anyone with less coverage than what you already have.
As a driver with assets to protect, you want to make sure that your uninsured and underinsured limits are the same limits as your liability limits. You need to answer the question: What are you doing to protect yourself in case someone sues you?
