Auto Insurance Evaluation

An Explanation of Automobile Insurance for Protecting Your Family

 

Why You Are At Risk

When you purchase automobile insurance, you are purchasing a contract to cover your damages in the event of an automobile accident. Many of our clients will tell us that they purchased full coverage on their automobile. The problem is that (full coverage) may mean that the vehicle is insured for property damage, but it does not necessarily mean the occupants of the vehicle are adequately insured for physical injuries. In other words, unless you have the right type of insurance, you may have protected your $15,000 car while risking that you could be personally responsible for a $50,000 medical bill.

Kentucky and Indiana law only require liability insurance of at least $25,000 per person, $50,000 per accident, and $10,000 for property damage. This means that the insurance company for the at-fault driver, also known as the liability carrier, is only responsible for one person's claim up to a maximum of $25,000 and no matter how many people are injured in this accident, a maximum of $50,000.

To illustrate, imagine that a drunk driver crosses into your lane of traffic and hits your vehicle head-on. You are severely injured and have over $15,000 in medical expenses and have been off work for two months. Even if the insurance company for the drunk driver is willing to pay their policy limits of $25,000 per person to settle your claim, this amount probably does not represent the true value of your claim or take into account damages such as additional lost wages, future medical expenses, or the permanent nature of your injuries. While the drunk driver is legally responsible for all the damages he has inflicted upon you, the real issue is whether he has the financial means to pay them. If the drunk driver works at a local supermarket earning $6 an hour and rents an apartment for $250 a month, chances are that he is barely supporting himself and he probably could not afford to pay your property damage much less your medical expenses. Even if you sue the drunk driver and win a $200,000 judgment against him, you have very little chance of collecting more than the $25,000 being offered by the insurance company, and the additional expenses of the lawsuit will most certainly lessen the amount you will actually recover from the $25,000. Of course, you also run the risk that the drunk driver may discharge some or all of your judgment by filing bankruptcy. The key to protecting yourself from this situation is knowing the type of automobile insurance coverage to purchase.

 

Underinsured Motorist Coverage

In the above example, the purchase of Underinsured Motorist Coverage from your own insurance company would have made all the difference in the world. The Becker Law Office would first seek to recover the $25,000 available from the drunk driver's insurance company. Assuming that the Becker Law Office could successfully argue that the value of the claim was worth more than $25,000 and the drunk driver's insurance company offered the full $25,000 to settle this claim, the Becker Law Office would then take several procedural steps, required by law, to make a claim against the underinsured coverage over and above the coverage of the drunk driver. In other words, as your representative, we would present evidence that your damages are worth more than the insurance coverage on the other driver. We would take steps to prove that the drunk driver was an underinsured motorist, in that he can not pay the full value of your claim, and therefore, you are entitled to make a claim against your own insurance company for underinsured motorist benefits. Basically, by purchasing the right type of insurance coverage, you have shifted the risk of loss and provided the Becker Law Office with another source for potentially recovering the full value of your personal injury claim in a fair and efficient manner.

 

Uninsured Motorist Coverage

Similar to Underinsured Motorist Coverage, Uninsured Motorist Coverage protects you when the other driver does not have any insurance on his or her automobile. While it is illegal to drive a car without insurance, people do it all the time. In the above example assume that the drunk driver did not pay the premium for his automobile insurance in a timely manner and was cancelled by his insurance company. While the drunk driver will probably be thrown in jail as a result of this accident and/or receive significant fines in regard to this matter, your primary concern is how is he going to pay for your medical expenses, your time off from work, and other damages.

Realistically, if the drunk driver was uninsured when the accident happened, he probably does not have any assets he was trying to protect. Further, even if he can pay for some of your damages, do you want it to take a significant amount of time to collect money from this drunk driver when your need for medical treatment is immediate. The key to preventing this type of situation is to have purchased Uninsured Motorist Coverage from your automobile insurance company. The Becker Law Office would present all of your damages to the uninsured carrier, and whether it be by settlement or through a lawsuit, that company is responsible for the damages the drunk driver was legally responsible for up to the limits of the uninsured motorist coverage that was purchased. In other words, for a few hundred dollars a year, you have again shifted the risk of loss and provided a means by which the Becker Law Office can potentially recover the full value of your claim. By simply knowing the right type of insurance coverage to purchase, you can make sure your family is protected in case of a severe automobile accident and provide the means by which the Becker Law Office can serve your needs fully and efficiently.

 

No-Fault Coverage

Lastly, we recommend that you consider purchasing additional optional No-fault coverage, also referred to as Basic Reparation Benefits or Personal Injury Protection. This coverage may or may not be available depending upon where you live, outside Kentucky for example, and therefore, we recommend that you contact your local insurance agent to see if it is. While $10,000 of no-fault insurance is mandatory in Kentucky, additional amounts can be purchased rather inexpensively. No fault insurance will pay your medical expenses and lost wages up to the limit of the coverage you purchased, regardless of who was at fault in causing the automobile accident. The popular misconception about no-fault insurance is that it means that the other person is not responsible for your damages. This is not true. No-fault insurance simply means that your own insurance company, or the insurance company for the vehicle you were traveling in, is responsible for your medical expenses regardless of who was at-fault for the accident and that company, not you, has the right to recover what they pay out from the at-fault driver or his insurance company. It does not mean that the Becker Law Office can not pursue a claim for your pain and suffering.

While no-fault coverage typically includes several other kinds of losses that can also be recovered, medical expenses and lost wages tend to be what it is primarily used for. The primary advantage to purchasing a high amount of no-fault coverage is that you know your medical expenses will be paid in the event you are involved in an automobile accident even if the other driver is uninsured or underinsured. Moreover, you know that you and your family members will have the funds necessary to obtain the proper medical treatment to address your injuries. Also, no-fault insurance will pay your medical expenses as your treatment is incurred rather than a lump settlement after your treatment is completed. In contrast, the other types of insurance coverage we have discussed so far tend to involve a single settlement once your treatment is completed.

 

Med-Pay

No-fault insurance may not be available outside Kentucky. Indiana is not a no-fault state and the most similar type of coverage you could purchase would be referred to as Med-Pay. The difference being that Med-Pay is typically limited to covering only your medical expenses which are related to the accident and does not include other items such as lost wages.

Regardless of whether it is med-pay or no-fault coverage, we suggest you talk to your insurance agent about purchasing insurance coverage that will cover your medical expenses in the event of an automobile accident. Simply put, if a family member is severely injured in an automobile accident, you want to be able to concentrate your efforts on helping that family member and the last thing you want to do is worry about how he or she is going to pay for the proper medical treatment.

 

Conclusion

We have only briefly addressed several kinds of insurance coverage in this article. We hope that you will discuss these types of insurance coverage with your insurance agent as the types of coverages and that laws that apply to them, differ from state to state. Nevertheless, in our experience, these types of coverages tend to be inexpensive and to avoid the risks discussed herein, are well worth their cost.

The Becker Law Office is committed to providing you with the information you need to fully protect your family in the event of an automobile accident. The Becker Law Office understands that when you are injured in an automobile accident, you need the financial means of addressing your injuries and preventing your family from falling into a financial crisis. The Becker Law Office is happy to answer any questions or concerns that have not been addressed herein and we encourage you to share this information with your family and friends. We are committed to making sure that our clients are protected in the event of a serious automobile accident and we hope you will support us in this effort. To make sure your family is properly protected, the Becker Law Office is happy to review your automobile insurance policy, without charge. If you are interested in this service or if you have any questions about this article, please feel free to contact Kevin Renfro, at krenfro@beckerlaw.com or (502) 581-1122.