By David Abraham
Here, I will begin a series on the ins and outs of the different automobile coverages available to the consumer. Most consumers are unaware of exactly what is available to them and why they need it. Unless they can’t sleep at 3 am, most policyholders never read their policy. Even then it’s not the first choice of reading material.
Have you ever asked, “well what did I buy insurance for anyway?” The simple one-word answer is protection. That protection applies to the policyholder as well as the other party(s) involved in the accident. The key is to know how much protection you can afford and should carry.
Let’s take the coverage that you have to have before you can put your car on the road. The minimum limits required by the State of Virginia are $25,000/$50,000/$20,000. What that means is that your insurance company will not pay more than $25,000.00 to anyone injured person as a result of the negligence of you or the driver of your auto in an accident. Also, they will not pay more than $50,000.00 in total to three or more injured parties in any one accident. The $20,000.00 limits indicate your insurance company will not pay more than $20,000.00 for any damage to someone else’s property as a result of your negligence or the negligence of the driver of your vehicle. That property damage can mean another automobile, fence, house, etc. that is damaged.
The question is, do these limits provide enough protection should the driver of your vehicle be responsible for an accident? In my opinion, they do not, but I know that there has to be consideration as to what someone can financially afford.
Many times, if an injured party goes to the hospital after an accident, several x-rays may be performed. Even if they are not kept overnight, follow-up visits to a physician or physical therapist can easily result in $10,000.00 to $12,000.00 in medical bills. It is not out of the question to see a $10,000.00 emergency room bill alone. Based on that information, the $25,000.00 limit I alluded to may not be enough to fully compensate the injured party.
At Osterbind Law, we routinely see cases that have a value well in excess of $25,000.00. The question then becomes whether the driver can be held personally responsible for anything above $25,000.00. In my years at Allstate, I handled a handful of claims wherein the policyholder provided their own money to the injured party in order to resolve everything. Keep in mind, this was a handful of claims compared to the thousands of claims I was involved in. While it’s not likely you may be personally responsible for anything above your limits if your insurance company pays your limits to the injured party, it is a risk. Increasing the limits of this coverage may provide you ample protection and the cost may be surprisingly low.
Let’s look at the $20,000.00 I noted in the earlier coverage string. Ask yourself how many cars on the road today have a value in excess of $20,000.00? If your answer was more than a couple, then this minimum coverage may be too low. Repair bills alone can be quite high, especially on expensive cars, not to mention the rental car that will need to be provided to the other party. Your insurance company will not pay more than the coverage limits you have chosen.
I go back to the question you may have asked earlier, “What did I buy insurance for anyway?” Is the liability coverage portion of your policy sufficient to protect you? It’s worth checking with your agent about higher limits. The additional cost may not be as high as you expected, and you gain much more protection. It is the obligation of your insurance company to protect you, that’s why you pay them a premium. However, they are only obligated up to the limits of your policy. Agents are a valuable resource, but you need to keep in mind, they have not seen what we at Osterbind Law see on a daily basis. They usually help on the front end, while we get involved on the backend.
At Osterbind Law we provide a service to our clients in that we review their insurance policies in order to advise them of what might be insufficient limits or additional coverages they may want to consider. Also, we want to make sure our clients are receiving all of the benefits their policy affords them for their accident. It’s just what we do. Obviously, the choice is yours; however, our recommendations are based on years of experience handling personal injury claims.
Next, we’ll look at medical payments’ coverage. We find many clients without that coverage and I’ll explain why it’s a valuable coverage for you to have on your policy.