By: Valerie Bradbury, Attorney, Ledger & Associates
In this economy everyone is thinking about the bottom line. It is the same story when purchasing auto insurance. The focus is on cost: how much are my premiums going to be? Of course cost should be considered, but most people aren’t considering the cost in the long term and the real risk of purchasing the cheapest insurance policy they can find. The reality is that the majority are purchasing minimum limits policies, if they are purchasing insurance at all. Minimum limits are 15/30, that is that maximum recovery under the policy is $15,000 per person or $30,000 for all the parties involved in the accident. This is leaving many people dire situations in their time of need. Protect yourself by being well-informed about what your policy does and does not cover.
Types of coverage:
There are several different types of coverage. The typical minimum policy only has liability coverage and property damage coverage because those are the only two types of coverage required by law in California. Let’s discover the truth about the different types of coverage.
If you are at fault for an accident, then liability coverage is available to the person you hit while you were driving your car. That person could be a pedestrian, bicyclist, motorist, or motorcyclist as long as you are driving your vehicle than this coverage can be used to pay for their medical bills, pain and suffering, and lost wages. This coverage is not available to you if you are at fault for an accident. If you are not at fault for the accident then you may be able to use the liability coverage of the person who hit you, that is, if they have insurance.
This type of coverage will come into play if you did not cause the accident and the person who hit you either did not have insurance (uninsured motorist coverage) or did not have sufficient insurance (underinsured motorist coverage), such as a minimal limits policy. It is important to consider that the incidences of convictions for Driving under the Influence have skyrocketed as people are depressed about their economic situation and turn to alcohol to forget about their reality. Another thing to consider is that when people lose their jobs they save the money they have to pay for necessities such as food and shelter while insurance payments go unpaid. These things are important to think about because the consequence is that, in this economy, there are many uninsured drivers out there. They are uninsured because they continuously get DUIs and become uninsurable or they are just not paying for insurance and it lapses, even though auto insurance is required by law. That is why it is imperative for people to purchase uninsured/underinsured motorist coverage. If the person that causes the accident does not have insurance and you do not have this coverage than there is no insurance coverage available for you to recover from to cover your medical bills, pain and suffering, and lost wages.
In California, in addition to liability coverage, property damage coverage is required by law. The minimum limit is $5,000. Like liability coverage, this coverage is available to the person who you are at fault for hitting with your vehicle. It pays for the damage to their vehicle.
Collision is the coverage available to you under your policy for the damage to your vehicle. This will cover the cost of the repairs or the market value of your vehicle. Many times this type of coverage will come with a deductable. If you have savings then you may want to take the risk and get a higher deductable. However, if you do not, then try to purchase coverage with without a deductable or with a low deductable. Purchasing collision coverage is also a good idea to protect yourself from the devastating effect of a hit and run or an uninsured driver. In either of these cases you would not otherwise be able to pay for the repairs to your vehicle or buy a new car.
Keeping in mind that the property damage minimal limit (which most people carry) is $5,000, rental coverage is a must. If you are in an accident and your car is a total loss but it is worth more than $5,000 and you do not have collision coverage with a limit higher than $5,000, then you are out of luck. In this case, you will not recover for the value of your vehicle that exceeds $5,000 or the cost of any rental vehicle. This becomes exceedingly important when there is more than two vehicles involved in the accident because all of the vehicles (other than the vehicle of the at fault party) must share in the $5,000 limit. In larger accidents the parties are often times rushed to the hospital and have no time or are in no condition to exchange insurance information and must be out of pocket for the rental until they can obtain the insurance information from the police report and open a claim with the at fault party’s insurance.
Uninsured Motorists and Proposition 213
If you considering taking the risk and driving uninsured, you may want to reconsider. Whether you simply did not purchase insurance or whether your policy lapsed due to a missed or a late payment, the effect is the same. If you cause an accident the person who you injured can come after you personally, or in other words, they can sue you. Proposition 213 bars recovery for pain and suffering if you are uninsured and someone else caused an accident and injury to you. That is, you are only entitled to get your medical bills paid.
Some advice in closing: don’t drive uninsured if at all possible, purchase as many different types of coverage as are available, purchase the highest limits you can afford, and do it now because you never know when you could get in an accident. If you do get an accident, call the experts at Ledger & Associates 800-300-0001.