Let's talk about automobile insurance.
What kind of insurance coverage you have is of vital importance these days. Your policy coverage could make the difference in your ability to deal with injuries to yourself or to others without ending in bankruptcy
Get your Declarations Page (Dec Sheet) from the front of your policy and follow along.A number of our clients tell us that they haven't thought about their own vehicle policy for years, they just pay the premium every time it comes up and don't really look at the coverage. Many of us have had the same insurance agent or agency for 10, 15 even 25 years.
What kind of insurance coverage you have is of vital importance these days. Your policy coverage could make the difference in your ability to deal with injuries to yourself or to others without ending in bankruptcy. We're going to offer several Let's Talk sessions which include short discussions of the different types of automobile insurance coverage, why you should carry insurance, what types of insurance you should consider carrying and the kinds of policy limits you should consider.
This first session will deal with automobile liability insurance. Liability insurance is a type of insurance coverage that will pay damages for which you might be found responsible to in the event that you are involved in an accident or your automobile is involved in an accident even if you weren't driving.
The short take away for liability insurance is that virtually every state requires a minimum amount of liability insurance but the required coverage is usually pretty low. To be safe you need to buy additional coverage to protect your assets. While liability insurance can be the most expensive part of an automobile insurance policy it can end up saving you a lot of money, a lot of time and a lot of heart ache or worry in the future.
Insurance is a Contract and the wording controls your rights.An insurance policy is a contract that you make with the insurance company. The insurance contract provides you with certain coverages or protections in return for your payment of an insurance premium payment. Most insurance company contracts allow the insurance carrier to control the investigation, handling and payment of any claims that may be made against you. The company will ultimately pay for any damages you cause up to the limits of the policy. If you have a minimum limits policy ,say $25,000 liability coverage , that is the most that the insurance carrier will pay regardless of the amount of damages you cause. If you cause $50,000 worth of damages from an accident the insurance company is still only going to pay 25,000 and you will be responsible for the rest. It is quite possible in today's world for one emergency room visit and one night in hospital to cost $25,000. Any serious injury that causes a person to be unable to work for any period of time or need surgery will add additional damages.
You should discuss with your insurance agent the amount of insurance liability coverage that you would need to protect assets like your savings account, 401(k), vacation home etc. in the event that you were involved in an accident and found responsible for the damages.
Along with the responsibility to pay for any damages that you might accidentally cause, up to your policy limit, the insurance carrier also has a duty to defend you if a claim is made against you or you are sued for damages. It is quite possible and in fact is often the case that both parties to an accident blame each other for the damages resulting from the accident. Even though the dispute may ultimately be resolved in your favor you could still spend a lot of money hiring a lawyer to represent you in the claims made against you. If you have liability insurance coverage your insurance carrier will hire a defense lawyer or law firm to defend you.
Please remember that if you have low liability policy limits the insurance carrier would be tempted to try to cut their losses by paying disputed claims even though you may not believe you were at fault. If the damages claimed against you exceed the amount of your insurance coverage then your insurance carrier will likely put you on notice that you need to hire your own attorney to represent you on the amount of damages claimed that is in excess of your liability coverage.
The Bottom Line on Liability CoverageBottom Line: The minimum liability limits required by your state are probably not enough to cover you in any sort of serious accident. The state mandated liability limits are minimum requirements for a person to license or drive an automobile in that respective state. These limits vary greatly from state to state and are almost never enough.
To give you a typical example your liability policy may divide liability into bodily injury liability and property damage liability. Bodily injury liability includes injuries, even fatal ones, which you or an insured driver in your vehicle causes to someone else. And property damage liability covers damage that you or your automobile cause to someone else's property such as other cars fences buildings lampposts etc. most states require bodily injury liability coverage but may not require property damage liability coverage separately from the bodily injury accident coverage. In short you should talk to your insurance agent about the type and amount of insurance that you carry and make sure you carry enough liability insurance so that you will have to sell your property or cash in your 401(k) to pay damages you cause someone else or cause to someone else's property.