Saving Money vs. Costing Money – Ensuring Adequate Insurance Coverage
We all see and hear the commercials constantly running on our televisions and radios, advertising cheaper insurance rates. And on the surface, it sounds like a great idea. I mean, who couldn’t stand to save a little money? Especially if you’re getting “full coverage” for the same price that you have been paying for your insurance for years.
Assuring that you have adequate coverage on your insurance policy can be overwhelming. Especially if you aren’t 100% sure of what you need. I personally know people in my field that have fallen prey to these ‘save money’ tactics used by some insurance companies.
The key phrase here is “full coverage.” What does “Full Coverage,” actually mean? When I sit down and think about what being fully covered means, the first idea that comes to mind is: collision coverage.Traditional collision coverage typically centers around payment for the damage to your vehicle, less your agreed upon deductible, or payment for the fair market value of your vehicle if it is deemed a total loss. However, there is another often overlooked necessity during the time it takes to repair your vehicle, or while you are looking to purchase a new one after a total loss. That is RENTAL COVERAGE. It used to be that when you were purchasing “full coverage”, your policy included rental car coverage. However more often than not, that is not the case anymore. Rental car coverage is one of the many classic insurance benefits that are now being sold ‘al-a-carte’. Unless you specifically ask for rental coverage, you may find that it’s not included in your policy until it’s too late. Also, some insurance companies are even going as far as making their customers pay out of pocket up front for their rental car costs and then making them wait to get reimbursed. These are all policy provisions that are written in such a way to save the insurance companies money.
I have seen some insurance policies written so that a person has what looks like a low deductible, $500.00 for a liability collision claim. When you scroll down you see that your uninsured motorist deductible is $1,000.00. Plainly, if you cause an accident and need to get your car fixed you will be required to pay a $500.00 deductible towards the repairs for your vehicle or your total loss. But if you are hit by someone that doesn’t have insurance, or flees the scene of the crash, you will have to pay the increased $1,000.00 deductible. Maryland laws prevent insurance companies from writing policies with different deductible amounts for uninsured motorist claims and require that a $250.00 deductible is accepted for uninsured motorist claims, however Virginia laws do not have the same requirement.
Another coverage that is often presented as an “optional” or “unnecessary” is something called PERSONAL INJURY PROTECTION (PIP) or MEDICAL PAYMENTS COVERAGE (sometimes referred to as medpay). These benefits provide additional coverage that if purchased, will make payments towards your medical bills in the event that you are in an accident, regardless of whose fault the accident was. This technically is an optional coverage if you live in Maryland or Virginia. However, I have sometimes seen these benefits be the determining factor as to whether or not a client’s case will settle or proceed to trial. The ability to pay some of their medical bills up front, or to avoid collections, can be crucial to achievable a better outcome for the client, in some cases. This type coverage is usually the first to get shaved off the policy, when trying to obtain a lower insurance rate.
Uninsured/Under-insured Motorist Coverage: Earlier this year, I had a client that purchased what he thought was going to be good coverage for his automobile policy. He was told that his liability coverage for automobile accidents was $100,000/$300,000. This policy coverage would generally be considered to be a good amount of insurance coverage. However, when his daughter was struck as a pedestrian in a hit and run accident while away at college, he discovered that the last time he “saved money” on insurance rates while “staying at the same coverage”, he ended up agreeing to a reduced uninsured motorist coverage on his policy, $25,000/50,000 which is his state’s minimum coverage. This was unfortunate because his daughter’s medical bills were substantial and just one of her bills exceeded the policy limit coverages available to them.
The bottom line here is that at the end of the day, having a trusted insurance agent isn’t always enough to ensure that you will have a policy written with the adequate coverage to protect you and your family if you are in an accident and you are at fault or if you are a pedestrian, or the victim of a hit and run accident. Saving money is always an attractive temptation, but staying informed and triple checking your coverage will pay off in the end.