Unfortunately, I frequently counsel people about appropriate insurance coverage after a car accident. Far too many times coverage is inadequate and since the coverage in effect as of the date of loss applies, nothing can be done with respect to adding or increasing coverage by the time I am involved. In short, it is too late.
I always go over what changes should be made for the future but, as I say, this does not apply to the accident before the changes. This article is written to provide guidance when considering what insurance coverage to buy.
First, we must draw a distinction between an insurance agent, an insurance adjuster, and an attorney. We do this to understand who provides us with the most reliable information. The attorney is most reliable.
An insurance agent sells you your policy. He or she represents him or herself and the insurance company. The incentive is based on sales. They must adhere to guide lines set by the insurance company regarding malpractice. They are the least informed about legal repercussions concerning coverage.
The adjuster represents the insurance company. They evaluate and investigate claims. Their incentive is to keep claim payments low. They must adhere to guidelines set by the insurance company which should be governed by law. They frequently receive legal opinions regarding the handling of claims. They have a working knowledge of legal issues.
The attorney represents the client's interest. They evaluate, investigate and advise regarding claims and lawsuits. They should be well versed in insurance law. They also should be guided by a canon of ethics. They should have superior knowledge of coverage issues.
The point in distinguishing the agent, adjuster, and attorney is to illustrate that the individual who sells you a policy, the agent, is not most informed about coverage issues. The agent does not deal with claims to collect benefits after an accident. The adjuster does that. But the adjuster represents the insurance company - not you! Therefore, you need to know what coverages to purchase and not blindly rely on what the agent tells you. An attorney is the best trained in this area.
I.
Bodily Injury
A. Liability Insurance protects the other driver
B. Insurance that protects you
1. Med Pay - Medical Payments
2. UN/UIM - Uninsured/Underinsured
II.
Property Damage and other expenses
A. Property Damage
B. Collision & Comprehensive
C. Rental
I. Bodily Injury
A. Liability Insurance Protects the other driver
Nevada law requires each driver have a minimum of $15,000 per person/$30,000 per accident, "Liability Coverage." This means all, non-fault, injured people in an accident can collect a total of $30,000 where no one person can collect more than $15,000. This coverage costs the most, and for good reason: The insurance company charges most for what you are required by law to have. They charge less for coverage you do not have to purchase and if they charged more for premiums, more people would not buy the optional coverage. If the insurance company sells less, they lower their profit.
It is very important to understand that liability cover-age protects other, non fault drivers . In other words, if you are the cause of an accident, the other, injured driver looks to your liability coverage for compensation. The more you have (and pay for) the more that is available for the other driver. You never collect from your own liability coverage. We will examine the advantages to having more liability coverage when we discuss uninsured/underinsured motorist coverage.
(Nevada Law also requires that you carry property damage. This coverage applies to the car and other property damage to the other vehicle. Your property damage is not paid for under this portion of your policy. )
B. Insurance that protects you
1. Fled-Pay - Medical Payments
Agents usually advise their clients that if they have health insurance, they do not need Med Pay. This is bad advice. While coverage may apply through your health insurance, those companies more times than not require reimbursement from any money received for the accident from the other driver's insurance company. This is called subrogation.
Conversely, Med Pay does not require reimbursement. Therefore, the insured receives full Med Pay from their own policy benefits and recovers from the other driver's insurance (assuming the other driver has liability coverage).
Finally, Med Pay is a relatively inexpensive form of health insurance and, for the benefits availed, outweighs the increase in premium. Med Pay benefits vary depending on the insurance company but typically vary from $1,000 to $100,000.
2. UM/UIM - Uninsured/Underinsured
In the event a driver is driving unlawfully, with no insurance, or carries inadequate insurance, you can re-cover from the UM/UIM portion of your policy.
This is very important coverage to have and is frequently not purchased. Here is why that is a very dangerous choice.
Suppose, for example, that a mother and her two children are coming home after grocery shopping and are stopped at a red light at a busy intersection. Suddenly, there is a collision in front of them resulting in one car flipping over and crushing the front hood of the car that mom and the two kids are in. One of the little boys' feet are crushed and the mother receives glass in her face resulting in blindness and scarring.
Now suppose there is $100,000/$300,000 liability coverage on mom's car and 0 UM/UIM coverage, and 0 Med Pay, and there is a 15/30 Liability policy on the at-fault vehicle.
This results in distributing $30,000 to all injured people (save the at-fault driver). Assuming no one else is hurt, that means mom and son get $15,000: this is obviously inadequate to compensate for the injuries. Had they also carried med pay and UM/UIM they would have been entitled to that money, too.
It is important to realize that going after the at-fault driver personally (that is, after collecting from his/her insurance), will typically result in bankruptcy protection and most attorneys will not pursue that course of action.
So protecting yourself with adequate coverage is very important. Planning insurance coverage is prudent because we can't plan accidents. UMUIM benefits range from $15,000 to $100,000.
As pointed out earlier, there are advantages to having more liability coverage: one of them is to avail higher UM/ UIM coverage. You can only have as much UM/UIM coverage as you have liability coverage. In other words, you cannot have 15/30 liability and 100/300 UN/UIM: although, since UM/UIM is much cheaper and protects you, that would be most desirable. You can, however, have 100/300 liability and 15/30 UM/UIM: This results in higher premiums for liability coverage and decreased protection.
You want to be sure to carry as much UM/UIM coverage as you carry liability coverage . That's all you can have, it's cheaper and it protects you. This is why you should consider higher liability coverage: to be allowed to buy more UM/UIM.
II. Property Damage and other expenses
A. Property Damage
Property damage is included with liability cover ag e. In other words, when you purchase mandatory liability coverage, property damage is included. Eg., 15/30/10 is $15,000 per person, $30,000 per accident and $100,000 property damage. This coverage, like liability, protects the other person's car when you are at fault.
It is important to distinguish property damage from personal injury coverage. Very often people will consider themselves "fully covered." What they are saving is that their car is fully covered. meanwhile their bodies and injuries are not.
B. Collision and Comprehensive
These are coverages you can opt to buy. The cost depends on the deductible you choose, the value of the car you are insuring and your driving records, among other things. This coverage protects your car regardless off fault.
C. Rental
The other driver's insurance company is responsible for your rental costs where no dispute of fault exists and the losses are reasonable. This may take a while to determine, in terms of days or weeks, pending the company's investigation.
If you opt to have rental coverage, you can have a car immediately and let your insurance company and the other insurance company work it out later.
Conclusion
Since we do not plan for accidents, the only thing we can do to avoid tragedy as much as possible is to plan our insurance coverage . Nevada embodies an insurance system that entitles you to purchase various coverages.
If you would like further explanation into the types of coverages you ought to have, or if you are currently in a dispute with an insurance company regarding coverage, you can contact the Titolo Law Office.
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The contents of this newsletter should not be relied on without proper legal consultation.
