Do you really understand your Automobile Insurance policy?
In Wisconsin, do you know that a used car salesman is obligated to give you more information about your used car then your insurance agent is obligated to tell you about the coverage in your own insurance policy?
Help educate yourself:
- Why it is so important that you read and understand your car insurance policy?
- What is UIM – Underinsured Motorist coverage?
- What is UM – Un-Insured Motorist coverage?
- What is medical payment insurance and how much coverageis acceptable?
- If you have a Wisconsin automobile policy and are injured in Minnesota, your policy can be magically rewritten to provide the minimum no-fault coverages required in Minnesota.
- Why, after filing a lawsuit, your own health insurance company may want to take most, if not all of your settlement money and leave you with nothing?
- What you must ask your agent in order to purchase appropriate underinsured motorist protection?
The following scenario has been presented to me on too many occasions.
You get that terrible telephone call in the middle of the night – your daughter has been seriously injured in a car wreck. She has been hit by a drunk driver. You go to the hospital and find your daughter is in a coma and she has a traumatic brain injury and is on life support. You spend many sleepless nights at the hospital and hopefully your daughter comes out of her coma. She is eventually transferred to a rehabilitation facility where she goes through the long process of relearning some of the skills she has lost and spending the rest of her life in recovery.
The medical costs are in excess of $500,000 for the intensive care, rehabilitation costs and therapies. Not included in these costs are the lost wages, the cost of future medical care and the diminished value of her life. One thing this family did not think they needed to worry about was how to pay the escalating medical bills. The health insurance company will surely pay for the hospital bills and we can make a claim against the drunk driver for his negligence. After all, the drunk driver is required to have sufficient auto insurance to cover the damages, including lost wages, future medical expenses and compensation for pain and suffering, isn't he?
When presented with this scenario by the parents of their injured daughter, I often find that the drunk driver had total liability coverage of $50,000 or $100,000. While that may sound like adequate coverage, it is woefully inadequate when their daughter's medical expenses are in excess of $500,000. While the parents are upset, they ask, “isn't the drunk driver responsible for all of these damages?” While legally the driver is responsible for all of the damages he caused, it is highly unlikely that he has any personal assets, above and beyond his liability insurance policy, to pay for the damages.
If the daughter's medical bills were paid by her parent's employer's health insurance plan, it was likely organized under the Employees Retirement Income Security Act (ERISA). The insurance plan will insist that they are entitled to recover all of the medical bills they paid before your daughter recovers any money. In other words, even where we are able to collect the $100,000 liability insurance proceeds from the drunk driver, the health insurers insist that they are entitled to most if not all of the $100,000, leaving your daughter with nothing from the drunk driver's liability insurance policy.
I THEN ASK THE PARENTS A QUESTION THAT ALMOST NONE OF MY CLIENTS CAN ANSWER:
“How much underinsured (UIM) motorist insurance coverage did you buy from your own car insurance company?” They have no idea what I'm talking about.
I asked them to bring the declarations page from their own automobile insurance policy to find out how much UIM coverage they had. Unfortunately, they often no UIM or only have $50,000 or $100,000 in UIM coverage. No one every explained to them the importance of buying the most UIM coverage that they could have afforded. Moreover, the cost of UIM coverage is a fraction of the cost that they pay for the collision coverage to fix their car.
Underinsured motorist coverage (UIM) is coverage you purchase from your own insurance company to protect you and is intended to pay for the damages caused by the negligent driver above and beyond the negligent driver's liability coverage. However, in Wisconsin the limits of your UIM coverage will be reduced by the liability limits of the negligent driver. If the daughter had $100,000 in UIM coverage and the drunk driver had $100,000 in liability coverage, present Wisconsin law amazingly authorizes the UIM insurance carrier to reduce the $100,000 UIM limits by the negligent driver's $100,000 liability limits, thus leaving the daughter with $0 in UIM insurance coverage. Even though she paid for $100,000 in UIM coverage, she collects nothing under this scenario. Minnesota law in contrast, permits the daughter to recover up to the policy limits of her purchased UIM coverage.
Uninsured motorist (UM) coverage is another very important coverage designed to protect you. For example, if you are injured by a negligent driver who flees the scene and is never identified, your own UM coverage will pay for the damages caused by the hit and run driver up to the UM policy limits.
I recommend that all of my clients review their automobile insurance policy. How much UIM and UM coverage should you purchase? The answer is simple, purchase as much as you can afford. UIM and UM coverage is cheap coverage for your peace of mind. Just do the math. Buy as much UIM and UM coverage as your insurance company will sell you. You will discover that you pay very little for a lot of UM and UIM coverage. Why don't insurance companies make recommendations like this?
Because it's a great deal for you and often not a great deal for them. An insurance company likes security and certainty and they get neither when they sell you high limits of UIMand UMcoverage.
Please take out your policy and review the “Declaration Page”. This is the page of your policy that shows what coverages you have and what you paid for each of the coverages. If you are confused or have any questions, email us at [email protected] or fax us your declaration page to 715-386-4158 and we will review your coverages and email you an answer to all of your policy questions. Please include your telephone number and/or email so that I can contact you.
If your coverage is anything less than $1,000,000 then call your agent and ask this question: What would it cost to upgrade my insurance to $1,000,000 of liability coverage and $1,000,000 in both UIM and UMcoverage? The agent may suggest you don't need that much. Don't accept this suggestion; just get them to price the coverage. Then, ask them to price the coverage downward. For example, what is the price of $750,000 or $500,000? Also inquire whether it would be cheaper to purchase umbrella coverage that also provides UIM and UM coverage as part of the umbrella. PLEASE MAKE THIS A PRIORITY AND PURCHASE THE ADDITIONAL AFFORDABLE COVERAGE NOW. IT'S TOO LATE AFTER THE COLLISION OCCURS.
Why am I alerting you to this insurance coverage? Simply because I have seen too many injured people who could have afforded future medical care and received adequate compensation for their injuries if they just would have had the knowledge and foresight to have purchased adequate UIM and UM coverages. Particularly when they could have provided protection for themselves and their family at a fraction of the cost of the protection they paid to repair the property damage to their automobile.
If you have any questions, please call me at (715) 861-2222 and I would be happy to help you sort out these issues before it's too late.