Insurance Coverages Explained

►Full Coverage  ►Liability  ►Uninsured Motorist  ►Med-Pay  ►Collision  ►Comprehensive  ►Rental

"Full Coverage" Myth

       Most people think they have all the coverage they need...until it's too late.  Many people mistakenly think that they are fully covered because they have "full coverage".  Unfortunately, the term "full coverage" does not have a standard meaning.  It can mean many different things, but for the most part, it means your vehicle is "fully" covered; not you...and even then, the term is misleading because even your vehicle may not be fully covered.  The banks and loan companies consider your vehicle to have full coverage if you merely have "collision" & "comprehensive" coverages, the kinds that will pay for your vehicle no matter how the damage occurred.  However, neither of these coverages will pay for medical bills or pain & suffering.  Furthermore, even if you have the right kind of insurance, you need to make sure you have the right amounts or you may still not be adequately covered.  Moreover, you need to make sure you have a company that will properly value your vehicle because even if you have the right amount of coverage, it doesn't do you much good if your company is one of those which uses CCC data to decide the value of your vehicle.  Higher limits won't help if your company stubbornly refuses to be fair.

[Top]

Liability 

       This is the main part of a policy.  It is the only part required by law.  It covers medical expenses, lost wages, pain & suffering, vehicle damage and any other damages that a court might require an at-fault party to pay if a case goes that far.  However, in order to get anything from this part of a policy, you first have to prove that the accident was someone else's fault.  If the accident was caused by someone else, their liability coverage will take care of you.  If you cause the accident, your liability coverage will take care of them. 

       Liability coverage is usually sold with a breakdown on limits such as 25/50/25.  This is the minimum required by law.  It means that you have limits of $25,000 per person for bodily injuries (with a cap of $50,000 per accident, meaning only two people could get the per-person limits) and $25,000 for property damage.  It is common to see policies of 50/100/50 and 100/300/100.  Some companies will sell "single limits" policies which do not contain internal per-person limits and do not differentiate between bodily injuries and property damage for limits purposes.

       Your own liability coverage "protects" you in that it pays the other person when you cause an accident so you don't have to pay them out of your pocket.  However, your own liability coverage gives you no protection in the form of medical coverage or coverage for your own vehicle.  Your liability coverage benefits are not for you...they are for the other person.

       It is extremely rare for the at-fault party's liability coverage to pay a medical bill as it comes due.  The law does not require them to do so.  They are only required to pay a verdict as rendered by a jury, up to the limits of their policy.  Short of actually going to court and presenting your case to a jury (a process that could take three or more years) a settlement from the at-fault party's company will be based purely on negotiations which in turn are based on what each side believes a jury would do if the case went that far.  Generally, instead of paying individual bills as they are presented, the at-fault party's company will pay a one-time, lump-sum settlement for all items of damage after you have completed all of your medical treatment. 

[Top]

Uninsured Motorist 

       When you buy UM coverage, you are basically buying insurance for people who don't bother to buy their own.  Having this coverage protects you if you get hit by a person who has no insurance.  If you don't have this and you get hit by an uninsured driver, you are usually out of luck because you can't use your own liability.  However, if you have UM coverage, your UM policy will step in and become the liability insurance for the uninsured person who caused the wreck.  If this occurs, your own company will become "his company" when you file a claim against the uninsured driver.  Your own company will hire a lawyer for the person who had no insurance and they will fight you just as if they really were "his company".

       To get any benefits from your own UM policy, you have to prove both that the other party caused the accident and the other party had no insurance.

       Underinsured Motorist  It may be possible to get into your own UM coverages, even if the other party had liability insurance but just didn't have enough to cover your accident.  If you are covered under more than one UM policy, these can be added together by a legal process known as "stacking".  If your stacked UM limits are greater than the at-fault party's liability limits, you can first go after the at-fault party's and then turn to your own company for further benefits, but only for the difference between the at-fault party's liability coverage and your stacked UM limits.  This is an extremely tricky legal procedure...someone who doesn't really know what they are doing could easily cut off your rights to continue against your own company.

[Top]

Med-Pay

       This coverage operates like health insurance in that it is first-party coverage and it will pay a bill as it comes due.  It is optional coverage and pays without regard to whose fault the accident was.  To use this coverage, it has to be on the car you are in at the time of the wreck or on a car owned by a relative with whom you reside.  The med-pay coverage on your vehicle offers no benefits to the other party if the accident was your fault; likewise, you can not get into the at-fault party's med-pay coverage, unless you are a passenger in the at-fault party's vehicle.

       Many people don't want to involve their own med-pay coverage when the accident was someone else's fault.  Insurance companies love people like that...people who will pay a monthly premium for optional coverage but refuse to use it when the time comes.  Almost all med-pay companies used to claim a right to get reimbursed (out of your settlement) for any bills which they had already paid.  We never honored such claims.  Most of them finally gave up on even trying for the reimbursement after a 1998 Georgia law made it more difficult for them.

[Top]

Collision

       This is a first-party coverage which will pay for your vehicle, regardless of whether the accident was your fault, someone else's fault or a deer's fault.  It also pays for objects coming from another vehicle, unless the object hit the roadway before it hit your vehicle.  If an object bounces from the roadway and hits you, your collision coverage no longer helps you...you must have comprehensive coverage for objects coming from the roadway.  Of course, if you know the identity of the vehicle from whence the object came, you can file on that vehicle's liability coverage.   

[Top]

Comprehensive

       This pays for damage caused to your vehicle by objects coming from the roadway but not for damage caused by objects coming directly from another vehicle.  Comprehensive also pays for damage from hailstorms, tornados, etc.

[Top]

Rental

       If the at-fault party's company is repairing your vehicle, they should provide you with a rental under the property damage portion of the at-fault party's liability coverage.  If your own company is taking care of the repairs under collision or comprehensive, you have to specifically have rental coverage with your company in order for them to pay for a rental.  However, even if you don't have rental coverage, if your own company is repairing your vehicle under your UM coverage, your company still should provide you with a rental since they would owe for everything that the other party's insurance would have had to pay if the other party had had insurance.  

[Top]