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If I Have ‘Full Coverage’ on my car, do I have enough insurance to protect me in a car accident?

PROBABLY NOT! “Full Coverage” does not mean you are fully covered in the event of a car accident.

Every coverage has a set limit which the insurance company will pay up to, and nothing more. Many persons have $100,000 per person and $300,000 per occurrence bodily injury, uninsured and underinsured motorist coverage limits, $50,000 property damage limits, and $5,000 medical payment coverage limits. If you have coverage limits equal to or less than these, you are underinsured and are at risk for potential financial ruin. Consider the following.

EXAMPLE 1: Your are seriously injured in a car accident by a driver who has NO insurance. Because of your injuries your medical bills are $100,000 and you lose $25,000 of income from work. Do you have enough uninsured motorist coverage?

ANSWER No! Uninsured motorist coverage limits of $100,000 will not come close to compensating you for injuries, pain and suffering, let alone for medical bills and lost income.

EXAMPLE 2: Same facts, but driver, instead of being without insurance has $100,000 per person bodily injury coverage. Do you have enough underinsured motorist coverage?

ANSWER No! You do not have underinsured motorist coverage at all because the driver has $100,000 of liability coverage. His liability coverage is deducted from your underinsured coverage ($100,000 liability minus $100,000 underinsured coverage = 0), leaving you with no underinsured coverage at all.

EXAMPLE 3 : You seriously injure a person in a car accident and you were at fault. The injured person has $50,000 in medical bills and will not be able to return to her $35,000 a year job. Do you have enough bodily injury coverage?

ANSWER No! The case against you is well in excess of your $100,00 per person bodily injury limit. Your limit of $100,00 per person and $300,00 for the occurrence means no one person can get more than $100,00 from your insurance company and if more than two persons are injured, your insurance company will pay no more than $300,000 for the occurrence. After the insurance money runs out, you are responsible for paying the rest!

So what can you do to protect yourself? I suggest, at a minimum, you purchase in addition to your regular car insurance, an umbrella policy with $1,000,000 of bodily injury, uninsured motorist, underinsured motorist, and property damage coverage limits. The cost of this insurance is approximately $120 a year and up, depending on the number of drivers in the household, driving records, and number of cars. You should also have a minimum $10,000 of medical payment coverage and, if your insurance company will sell you more, buy up to $25,000 of medical payment coverage. Your uninsured/underinsured motorist limits should always be equal to your bodily injury limits. DO NOT insure one car for less than the other.

An accident does not always happen to someone else. Buy enough insurance, buy the right coverages and don’t believe “full coverage” means enough insurance. If you have any questions about insurance or uninsured or underinsured motorist claims, feel free to call me.