Auto Insurance Lingo
What do we really meant by saying, "I only have liability insurance coverage on my auto". The word "liability" in the dictionary states "the quality or state of being liable". Being "liable" is another way of saying, you are being exposed or subject to some usually adverse contingency or action. We insure ourselves to protect us from liability exposures. Use your imagination and list down at least 10 possible ways of being sued because of failure to exercise the care that a reasonably prudent person would exercise in like circumstances. We are exposed to liability, day-in, day-out. Liability coverage limits on autos (that is for the damage you do to others) are usually presented as a sequence of three two digit numbers separated by forward slashes. Pull out your auto insurance declaration page and look for these numbers. For example, your insurance agent might say that your policy carries liability limits of 15/30/5. That is, you carry $15,000 in bodily injury coverage per person, $30,000 in bodily injury coverage per accident or per occurrence, and $5,000 in property-damage coverage per accident. By the way, this coverage limits is the minimum you have to carry here in the state of California. If you are to ask me, I will not ever drive a vehicle carrying only the minimum limit required by law. Too dangerous, too risky, too many personal injury lawyers! Just browse your yellow pages and you'll be surprised how thick they can be!
Today, they say that it is virtually impossible to determine the level of coverage one should carry until after a lawsuit is filed, served and the defendant has been required to state under oath the amount of insurance coverage available to satisfy the claim.
When a serious injured person has a claim reasonably valued substantially more than the available insurance coverage, that case can and will settle early in most cases. In cases where the coverage is many multiples of the reasonable value of the claim, for example in the case where the claim value is $50,000 and the coverage is $300,000, the likelihood of an early settlement is generally less because the insurance company is not at risk for not settling within policy limits and thereby putting its insured at risk. In cases where the reasonable value of the claim is $50,000 and the coverage is $50,000, early settlement is much more likely. In automobile injury cases where the defendant's coverage is substantially lower than the amount of the claim, it is also necessary to make a claim against the injured person's uninsured/underinsured, often referred to as UM, coverage. So when an initial settlement with the defendant's carrier will provide a small recovery, it can be possible in cases where there is sufficient UM insurance to obtain additional compensation though UM arbitration. That is the very reason why you need to take a second look at your Uninsured/Underinsured motorist provision. Make sure you have enough insurance coverage on this section of vital coverage because an alarming number of insured motorist do carry only the minimum allowed by law (not because they wanted to but just because in general no one has ever explained to them what the liability limits meant). Most of us will learn it the hard way. Not until they become involved or get seriously hurt in an accident that they will find themselves underinsured.
In the year 2001, 3,000,000 people were injured in motor vehicle accidents, making auto accidents the leading cause of injury and death in the United States (http://www.nhtsa.dot.gov/). The NHTSA (National Highway Transportation Safety Administration) reported other very alarming statistics on automobile accidents:
- 3,000,000 injuries of which 41,300 were fatal.
- More than one quarter of those fatalities were people under the age of 20.
- In 40% of those traffic accident fatalities alcohol was a contributing factor
- 63% were caused from improper use of seatbelts.
If you drive or travel in an automobile, odds are you will be involved in at least one automobile accident. Always protect yourself by observing the rules of the road and purchasing adequate auto insurance that includes uninsured and underinsured motorist's coverage. Keep in mind that you purchase liability insurance in case you injure or cause property damage to someone else, but you carry uninsured and underinsured motorist insurance coverage to protect yourself. The statistics in California show that almost 25% of the cars and drivers on the road today are uninsured.
If you have been involved in an automobile accident or traffic collision you may be entitled to compensation by the negligent party's insurance company and/or your own if the negligent driver was uninsured or underinsured. Never proceed with a negligence claim without first obtaining legal advice. An attorney experienced in the practice of personal injury law knows the court system, can cut through insurance company red tape, and will make sure you are justly compensated for all current and future damages.
Editor's note: If you have any questions or concerns regarding insurance or would like to know more about it, you can call me at (510) 384-5164, visit my website http://www.farmersagent.com/alagumen or email me at alagumen@farmersinsurance.com
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