I am continuing where I left off last month in reviewing the personal auto policy. As you may recall, I discussed the limitations that occur when you buy an additional or a replacement vehicle.
The thing to remember is, if you buy an additional vehicle, it receives the same coverage given to your best covered auto for 31 days and then stops completely; but, if you buy a substitute vehicle, it receives the same coverage as the vehicle it replaced until the end of the current policy term unless the agent is notified. So, a change in vehicles means a phone call to the agent. If you would like to review any previous articles, I encourage you to visit vbmonline.com.
The auto policy is made up of several separate coverage parts. Long ago, these were all written as separate policies. The first part that the state mandates is Liability Coverage. This provides protection to others, for your actions in the use of a vehicle. The state only requires that you carry limits of 20/40/15. That means $20,000 per person and $40,000 per accident for bodily injury and $15,000 per accident for property damage. Before I continue, I must stress that these state minimum limits are grossly inadequate for many accidents that might occur.
Consider that if you caused a relatively minor accident involving two other cars with two persons in each. The damage to one vehicle can easily reach $8-10,000, and if totaled, most new cars cost well over $15,000 today - many are double that amount. But the policy will stop paying damages at its $15,000 limit.
The Bodily Injury coverage offers two caps. First, the $20,000 per person with a total for all persons involved in the accident of $40,000. When you consider emergency room fees, ambulance service, lost wages from inability to work, an allowance for some pain and suffering...oops, your policy is tapped out. So, your accident, causing injuries to these four fictional people, could easily exceed the amount available. And that didn't even require a lawyer to do all that.
My point is, that these limits need to be thought out carefully, because your liability to another person does not end when your policy is used up.
The reverse to this coverage is called UM/UIM or Uninsured/Underinsured motorist coverage. This is coverage that you can buy to benefit yourself, your family and others riding in your vehicle. It covers personal injury and property damage caused to you by others who have minimum limits or no insurance. This includes a hit and run incident.
The limit can be as high as that offered to others through the liability coverage part of your policy. This gives you a nice feeling of security to know that you are protecting yourself as much as you are affording protection to others.
While it is an optional coverage, I always quote this coverage because going without is taking an unnecessary exposure to risk for only a nominal savings.
We often give others a ride in our car and many times those are children. Imagine having an accident while carrying your best friend's daughter and having to tell your friend that you don't have any coverage for his or her daughter who was hurt by another uninsured driver hitting your car, because you declined this coverage. It seems the odds are good that the irresponsible driver out there having wrecks is also going around uninsured. At least, the bet is good enough that it's worth having this coverage to hedge that bet.
The excuse of having medical insurance is often used for two other optional coverages: Medical Payments and Personal Injury Protection. These provide coverage for small medical bills incurred from injuries received while riding in, entering or exiting, and loading or unloading a vehicle. As an insured, you receive this coverage even as a pedestrian or on a bicycle. It, too, is provided to others riding in your car. The P.I.P. coverage also includes extra living expenses and lost wages - regardless as to who is at fault.
The last part of the basic auto policy is Coverage for Damage to Your Auto. People sometimes erroneously call this "full coverage." I shudder to type that. Please remember that there is no such thing. It's similar to the way we in the south refer to soda pop as Coker when we could be referring to any brand. It is quick and easy to say it. But Collision and Comprehensive (now called Other Than Collision because we're afraid of broad terms in contracts) are the parts affording protection for hitting things or having bad things like theft, vandalism, hail, broken glass, flood and many other things happen to your car.
That's the basic un-endorsed auto policy. I will leave you with one quirky fact. If you hit a deer, or a person, it is covered under Other Than Collision, rather than Collision. Don't ask me why - I just sell the stuff.
Russell Janecka is a Certified Insurance Counselor. He is the owner of Janecka Insurance Agency in Victoria, and serves on the board of directors with Germania Insurance Companies. (361) 573-4475 e-mail: info@jiavic.com
