What The Gecko Didn’t Tell You About Car Insurance
For many, auto insurance enjoys the company of death and taxes on a list of undesirable inevitabilities. Everyone knows that they are required to have it if they own and drive a vehicle, and most are vaguely aware that it serves some legitimate purpose, but very few understand the potential implications of selecting from various policy and coverage options.
Unfortunately, when shopping for insurance, the conversation between the customer and the broker typically goes something like this:
“Broker: What amount of coverage are you interested in for your vehicle?”
“Customer: What’s going to cost the least per month? I want that.”
With the overabundance of television, radio and internet advertisements featuring reptilian and cloven-hoof mascots, or a certain abnormally-spunky-if-not-incessantly-irritating spokeswoman, it’s no surprise that the priority for many is paying as little as possible for something that they are required to have. And while cost is obviously an important consideration, often the customer doesn’t even understand what it is that they are purchasing.
Here is a quiz: What are the bodily injury limits of your current auto insurance policy? If you know the answer, you’re doing better than most. If you have no idea what bodily injury limits are, or whether or not you even have them, then listen up.
Simply put, bodily injury limits are the maximum amount of money that can be recovered by a person (or persons) hurt in a car accident caused by YOU. Go and get the declaration sheet from your insurance policy right now. That’s that big piece of paper your carrier sends you at least once per year that lists what all of your coverage amounts are, that you probably didn’t read and is currently sitting in a folder with other “important documents” somewhere in your home office, or that top drawer of your dresser that you don’t use for clothing.
Now that you have found it, look at the item labeled “Bodily Injury.” You will likely see two numbers listed in the format of “XX/YY.” The first number (so, XX in our example) is the maximum amount of money that any single person injured in an accident caused by you can recover. The second number (YY) is the total maximum amount of money that is available to be recovered from the accident by all individuals other than you. In New York State, the minimum amount of coverage allowable is $25,000/$50,000. If this is what you have, then the most that anyone injured in an accident caused by you can recover is $25,000, and the total amount of money available to compensate all injured parties other than you is $50,000. This is referred to as “$25,000 per person/$50,000 per accident.”
“Ok great. So what? How does that affect me and why do I care how much money someone else can sue me for? Why would I want my coverage to be anything less than the minimum?” Well, the flip side of bodily injury coverage is something called Supplemental Uninsured/Underinsured Motorist coverage (SUM or UM/UIM for short). Your SUM policy limits always match your bodily injury limits, and here’s how it works: Let’s say that tomorrow you are stopped at a red light, and someone driving behind you is distracted by their cell phone and drives into the rear of your car at 60 miles an hour. Both of your wrists break from the way you are holding the steering wheel when you get pushed into the car in front of you, and you have to undergo multiple surgeries and months upon months of painful physical therapy to recover. Let’s also say that the person who hit you has the minimum amount of coverage: $25,000/$50,000. The most you can recover from them is $25,000. That’s all you get to compensate you for your pain and suffering, the many months of painful procedures and therapy, and your time missed playing piano at the New York Philharmonic (work with me here). Obviously, $25,000 isn’t enough money, because your injuries are worth more than that (especially if you have a certain aggressive, savvy and dashingly good-looking plaintiff’s lawyer representing you, who’s office just happens to be conveniently located right in the City of Poughkeepsie….ahem…) Now what?
Lucky for you, you read this article and understand how your auto insurance works. As soon as you were done reading, you got on the phone with your carrier and told them to increase your policy limits to $1 million/$3 million. Now, you can make a claim against the carrier for the person who hit you, and when you have collected their full bodily injury policy limits ($25,000), you can turn to your carrier and make a claim under your own SUM policy for the difference: up to $975,000. Thank goodness you changed your way of looking at auto insurance, and care about more than spending the bare minimum per month.
The moral of the story? Don’t leave it up to the person who hits you with their car to have enough insurance coverage to protect you. That person might be like you before you read this article. They may not know what they are getting when they purchase insurance. They might not care about anything other than paying bottom dollar. Take matters into your own hands. You are required to have insurance anyway – you might as well have enough to protect yourself.
By John J. Ventosa, Esq.
John is an associate at Jonna Spilbor Law and represents individuals who are injured due to the negligence of others, including individuals injured in auto accidents. If you were injured and it wasn’t your fault, John can help you get what you are entitled to under the law.