LEGAL MATTERS: Does Your Car Insurance Really Cover You?
Wednesday, May 23, 2012
Are you really covered?
Two of the most important considerations in the purchase of vehicle insurance are the type of coverage and the coverage limits. Rhode Island law requires that drivers have a policy of insurance with minimum limits of 25/50/25. Such minimum coverage provides up to $25,000 for each person injured as a result of your negligence. The second number represents the total amount of coverage for all injured in the collision which is capped at $50,000. The final number represents the $25,000 coverage for property damage you caused.
Sound sufficient? Only if you’re lucky.
If you only have the state minimum you will have NO coverage for you or your vehicle through your own policy. That’s a problem if you are hit by an uninsured driver or a driver with the state minimum and your damages exceed their coverage. And don’t bet it won’t happen. A statistically significant number of drivers have no insurance and of those who do, many of those have only the state-required minimum coverage.
Rather than view insurance as a necessary evil, drivers should accept the fact that insurance plays a critically important aspect in protecting them and their families.
Uninsured Motorist Bodily Injury Coverage
The most important coverage a policyholder can buy for self protection is Uninsured Motorist Bodily Injury Coverage (UMBI). UMBI coverage provides protection for injuries caused by another driver who is uninsured or does not have enough insurance. Generally, a policyholder may only buy UMBI coverage in an amount equal to or less than the amount of Liability Coverage contained in the policy. Because of this, it is strongly recommended that policy holders pay particular attention to policy limits. Several hundred thousand dollars may seem like a lot on paper but if you’re unfortunate enough to be involved in a catastrophic collision, medical bills can sky rocket into the six-figure range.
Other coverage that can provide significant protection for your vehicle is Collision Coverage and what is commonly called Comprehensive Coverage or Coverage for Losses Caused by Incidents Other than Collision. Numerous clients over the years have had vehicles sitting in their driveways awaiting repair because the driver at fault was uninsured or the two sides were fighting it out. Collision Coverage pays for damage to your vehicle regardless of who is at fault in the collision. Comprehensive Coverage or Coverage for Losses Caused by Incidents Other than Collision is also important and will protect you from losses due to events such as fires, floods or falling tree limbs. If you can’t afford to replace the vehicle out of pocket then arguably you can’t afford to be without this type of coverage.
Medical Payment Coverage
Medical Payment Coverage, usually written in $2,500 increments in Rhode Island, covers medical bills incurred by the driver and passengers up to the policy limits. This is especially important if you have no health insurance or high co-pays or deductibles.
Unfortunately, drivers who are least able to withstand an uncompensated loss are usually in a financial situation that leaves them unable to buy ideal coverage. When total premium cost is an issue, policyholders may want to review their policies. Towing reimbursement and accident forgiveness are good to have, but if you have to cut costs, those are two items that a policyholder may want to consider dropping to keep premiums affordable.
What you may consider dropping
You may also want to consider dropping Uninsured Motorist Property Damage (UMPD). Not to be confused with UMBI, UMPD pays when your car is damaged by an uninsured motorist. However, if you already have collision coverage, the only real effect of UMPD is that it will fully or partially cover your deductible. In some instances this can be expensive for the relatively little protection it affords.
If you have major medical coverage, then consideration may be given to dropping medical payment coverage.
Finally, the deductible for collision and other than collision coverage can be raised, thus reducing the premium if the bottom line is high.
Careful consideration of the types of coverage, coverage limits and deductible limits can result in affordable protection for the policyholder and those insured by the policy. Once a collision occurs it is too late.
The foregoing is offered for informational purposes only and is not legal advice nor does it create an attorney-client relationship.
Susan G. Pegden is a litigation associate with the Law Firm of Hamel, Waxler, Allen & Collins in Providence. She is admitted to practice in Rhode Island and Massachusetts and is a member of the Board of Governors of the Rhode Island Association of Justice (RIAJ).
Sean P. Feeney is a partner with the Law Firm of Hamel, Waxler, Allen & Collins. He is admitted to practice in Rhode Island, Illinois and Wisconsin. Mr. Feeney is a former special counsel to the City of Providence, military prosecutor with the United States Marine Corps and Special Assistant United States Attorney for the Central District of California.
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