One of the most frequently asked questions I get from friends and family members as an insurance attorney handling peoples injury and property claims is “what kind of insurance do I have?”
The most common statement a client makes when they come in the offices usually is, “I have full coverage.”
However after reviewing thousands of insurance policies, it has become clear that most people don’t know what “Full coverage” is. In past years, many people used insurance agents who were helpful in explaining what types of coverages people needed. Agents would have assisted them in purchasing their insurance. If you are able to use an insurance agent that you know and trust, I would highly recommend that. Understanding insurance coverages can be complex, and often times a large increase in coverage comes with a very small rate increase.
What Insurance Coverages are Available?
For that reason, it is extremely important to understand what insurance coverages for your automobile are available and what the different coverages mean in the event that you are injured or your property is damaged or you have injured someone else. Most auto insurance policies are relatively simple to understand if you know the terminology they use. I think insurance companies intentionally use vague and ambiguous language so that people don’t know what they’re really buying. The following are the type of coverages that you will be asked if you buy insurance online or by an agent when you go to purchase insurance. Your responses and your purchases can be critical to your well-being in the event that you or someone you love is injured in an accident.
The first coverage that you purchase, which is required by law, is called liability coverage (often called bodily injury coverage). What that means is the amount of money that your insurance company will pay for property damage and bodily injury for the adverse driver and passengers ( a.k.a. third-parties) in the event you cause an automobile accident. In Nevada, state minimum is 15/30/10. Most people do not know what that means either.
When there are three numbers, the first number is the amount your insurance company will pay per person for bodily injury and the second number is the amount your insurance company will pay per accident for bodily injury. For example if you get into an automobile collision and it is your fault and there’s one person in the other vehicle they can only obtain $15,000 from your insurance company. If there were two people in the vehicle they could obtain $15,000 each. However if they were three or more people in that vehicle, the $30,000 would be split between those people if they were injured.
It is not rocket science to know that in today’s exorbitant world of medical billing, $15,000 does not go very far.
The third number is the total amount your insurance company will pay for property damage to the other vehicle or property such as a damaged road sign as a result of the accident.
Does minimum liability insurance protect me?
If you purchase a minimum insurance policy you could wind up being personally exposed. Meaning, if there’s not enough insurance coverage, the other driver could sue you and obtain a judgment against your personal assets to recover their damages. For this reason, it is extremely important to insure yourself and your family as high as you can afford to in order to protect your personal assets. Meaning if you own your home, and you have savings accounts, you want to make sure that you have enough insurance. I often recommended umbrella policy to people which is usually a cost of approximately $12-$15 per month and will protect your assets. An Umbrella policy provides a higher layer of coverage for your auto, home, boat, etc. on top of your limits, usually in the amount of a million dollars.
Collision / Comprehensive
The second type of coverage which most people consider to be “full coverage” is collision coverage. Collision coverage means that payments will be made to fix your vehicle in the event that your car is damaged in an accident. If you purchase collision coverage, that coverage will cover damage to your automobile.
It is extremely important to know what your deductible is. Often times, changing your deductible from $1000.00 down to $500.00 is as little as $8.00 to $10.00 on your overall premium. It is important that you check what you’re paying for and what you could get for just a little bit more. When you go to Target, you can see all the items on the shelf and you can see what all the items cost and their value so you can choose accordingly. Unfortunately, with buying insurance, they don’t make it that simple. You have to ask these questions either of the agent or when you’re buying online you need to change the deductibles and change your coverages and see how it affects your premium.
Medpay / PIP
A little known coverage that many agents don’t even mention or offer is called Medical Payments coverage and this can be extraordinarily important for you if you are in an accident. Medical Payments Coverage is usually a fixed amount anywhere from $1000.00, or $2,000.00, or $5,000.00 on up. It means that your insurance company will pay your medical bills regardless of whether you have health insurance if you are in an automobile accident and you’re injured.
Medical payments coverage can be very important because often times you may have large co-pays, especially for ambulance bills, from an accident. Health insurance often will not cover things like physical therapy as much as you need or you may have large deductible on your health insurance policy. Medical payments coverage is generally an expensive coverage which will protect you from out of pocket medical expenses if you are in an accident. It’s important to know that even if it is not your fault, it can take months or years to recover from the other driver. Your medical providers, (hospitals, ambulances, quick cares, etc.) will not wait until the claim is final to send you to collections. When purchasing insurance always look at what medical payments coverage is available and the cost.
If it fits your budget, you should purchase medical payments to protect yourself. Another important issue to know about medical payments is that it is not an at fault coverage, meaning if you use your medical payments coverage on your policy, it is not counted as a claim against you for your rates.
Another extremely important coverage that people often drop to save money is called UM/UIM. This means uninsured or underinsured motorist coverage. Uninsured is self-explanatory, it means that if someone without insurance hits you, you have coverage for your medical bills and injuries. Underinsured coverage means that if someone with a small policy, like the state minimum of $15,000 hits you and you are seriously injured, you can recover against your own policy after the $15,000.00 is paid from the other driver.
In the state of Nevada, it is estimated that 13% of all drivers on the road do not have car insurance. It is extremely important to protect yourself and your assets from reckless and illegal drivers. In the state of Nevada, when you purchase insurance, the insurance company is required to offer you UM/UIM benefits and if you reject the same they must have you sign a waiver. Think carefully before you reject these benefits because if you are in a serious accident these benefits could protect you and your loved ones from undue financial burden.
Rental car & roadside assistance
Also, there is the coverage for rental car benefits and towing. These are somewhat self-explanatory, however, there are a few tricks. When looking at your towing coverage always check the amount of miles that they will tow your vehicle. Sometimes they have separate towing packages where they’ll only tow your vehicle 5 -10 miles and then you are at the mercy of the tow truck company for the rest of the bill. It’s often pennies to change the policy to a better towing policy where they will tow you up to 100 miles. It is similar with rental coverage. If you, like me, drive a large vehicle to take your family places and haul groceries, and you are need of a rental car from an auto accident, most policies will offer you the $20 a day, very basic economy car. This may not fit your needs, and if it does not, it can be very costly to you to rent a larger vehicle. When purchasing rental insurance you usually have the option of $20-$30 a day or $50 a day in rental coverage. Again, this is generally a very inexpensive change on the policy and when purchasing rental insurance, check to see the cost of having a better vehicle in the event that you need a rental car. Often it is less than five dollars.
I hope this information was helpful and if you ever have questions when purchasing auto insurance, please do not hesitate to contact the Law Offices of Laura Hunt. The Law Offices of Laura Hunt is a boutique law firm in Henderson that specializes in helping injured people and the community with legal issues involving insurance and auto accidents. Please feel free to call if you have questions when purchasing your auto insurance at 702-450-(HUNT) 4868