Shopping for Insurance
You might think million-dollar insurance settlements and jury verdicts are
common. They are not.
Your odds of being on either end (payer or payee) of a million-dollar suit are less than your odds of winning the big prize in the Lottery. These long odds are not good for lottery players. However, they are good for injury claims.
You do not want to sue or be sued for a million-dollar injury. Claims of this
size generally are reserved for those who suffer catastrophic injuries. Money never can adequately compensate for these losses.
But while million-dollar injuries are rare, claims that exceed minimum levels of insurance coverage are somewhat more common.
A million dollars in liability insurance coverage may be unnecessarily high for most people, but it appears that most people are seriously underinsured.
Most automobile owners who have insurance carry only the minimum levels of coverage required by state law. The majority of homeowners and renters are no better protected.
These coverage's are inadequate for most people.
The effect of insufficient insurance protection can be devastating. Because marginally higher coverage is so affordable, it is unwise to run even the modest risk associated with having only a minimum amount.
We recommend at least these levels of insurance coverage for all automobile owners:
Personal Injury Liability - $100,000 per person / $300,000 per accident
Property Damage Liability - $50,000
Personal Injury Protection - $10,000
Uninsured Motorist - $100,000 per person / $300,000 per accident
Underinsured Motorist - $100,000 per person / $300,000 per accident
Homeowners and renters should have liability protection of at least $100,000 per person / $300,000 per accident.
Types of Auto Coverage
What follows is a simplified, plain-language description of the most common categories of auto insurance coverage and how they may benefit you.
Bodily Injury Liability
If another person is injured because of your carelessness or the carelessness of someone driving your car, this coverage typically requires your insurance company to pay the claim. The company's obligation is limited, however, to the amount of coverage you purchased. For example, if your liability limits are the minimum of $20,000 per person and $40,000 per accident, your company will pay no more than $20,000 to each injured person and no more than $40,000 total for any one accident.
This is similar to bodily injury liability except that it covers damage to another person's property rather than physical injuries. The company's obligation to pay also is limited to the amount of coverage you buy.
This category of protection generally requires your insurance company to pay for damage to your car caused by something other than an auto accident (for example, fire, theft or vandalism). The company's obligation to you will be limited by the amount of any "deductible" you may have purchased. A $100 deductible means that you pay the first $100; the company pays the rest.
Your insurance company pays for damage to your car caused by an auto accident. Deductibles also are common with this coverage.
Personal Injury Protection
Your company will pay the reasonable medical expenses of anyone in your car who is injured in an accident. Under this coverage, it does not matter who was at fault in the accident. You and most members of your household need not be in a car for this coverage to apply. For example, you also would be covered if struck by a car while you were a pedestrian. A portion of your lost earnings are also covered by this type of insurance. As with liability insurance, the company's obligation is limited to the amount of coverage you buy.
If an uninsured driver injures you or other occupants of your car, this coverage will pay your claims for physical injuries. It serves as a substitute for the bodily injury liability insurance that the other driver did not have. This coverage also is limited to the amount of insurance you buy. As with personal injury protection coverage, payment is not limited to automobile occupants.
If a driver injures you or your car's occupants, and his liability insurance is insufficient to cover the full value of your claims for physical injuries, this coverage will make up the difference. Again, your company's obligation is limited to the amount of coverage you purchase. Like personal injury protection and underinsured-motorist coverage, it is not limited to automobile occupants.
Insurance Required in Most States
All motorists should carry automobile insurance. Since the early 1980’s, it has been the law in most states that all motorists must carry automobile liability insurance.
In most states motorists must now show proof of liability insurance to receive or renew a driver's license, receive a safety inspection sticker or register a vehicle. A significant fine for not having insurance coverage in most states is currently the law. A second offense could mean impoundment of your vehicle and suspension of your driver's license.
Some people may be confused about the various types of automobile insurance available, the purpose of each type of insurance, and the costs related to that insurance coverage. The basic types of automobile insurance are (liability minimums vary by state law):
This coverage protects you if you drive negligently and cause injury to another person or damage to another vehicle. In Texas, the law requires every automobile owner to carry liability insurance in the minimum amount of $20,000 per person injured. In Oklahoma, the minimum amount is $10,000 per person injured. It is usually wise, and normally not much more expensive, to carry more insurance than the minimum limit. If you do not have enough insurance to pay for the damage or injuries you cause, you could be personally responsible for the additional cost of the damage or injuries.
Personal Injury Protection coverage/Medical Payments coverage
This is a form of "no-fault" insurance coverage that pays medical bills and lost earnings for you and others in your car, no matter who was at fault in the collision. PIP is available in different amounts, and $10,000 worth of coverage is generally not much more expensive than $2500 in coverage. PIP coverage pays benefits if any member of your family is injured in any automobile, and if any person is injured in your automobile. It is a very worthwhile addition to your basic automobile insurance policy.
Uninsured and Underinsured Motorist coverage
This coverage will pay for property damage or injuries sustained by you, your family members or occupants of your automobile and caused by drivers who have no liability insurance, or insufficient liability insurance, of their own. In other words, this coverage replaces the other driver's liability insurance. This coverage is optional, but highly recommended. Without it, you will have no protection if you are involved in a collision with an uninsured driver.
This pays for property damage to your car if it is involved in a collision, no matter who was at fault in the collision. This insurance will pay for your property damage even if the collision was your own fault. There is a "deductible" amount that you must pay, and your insurance company will pay the remainder.
This coverage pays for loss or damage to your automobile or its contents in situations not involving collisions. For instance, this insurance applies in cases of hail damage, fire, theft or flood. The question of fault does not apply to comprehensive coverage, but there is a "deductible" amount you must pay.
Automobile insurance rates vary widely depending on the insurance company or agent you choose, the types and amounts of coverage you want, and the kind of car you drive.