Too often, individuals find out after an accident that their insurance coverage was not as “comprehensive” as they thought. Many times, brokers or insurance company representatives do not properly explain the importance of policy features such as medical payments coverage or uninsured motorists’ coverage.
The limits of coverage on a policy is likely the most important characteristic of the coverage provided. The limits of coverage will normally be reflected by two numbers such as “$25,000/$50,000.” The first number represents that total amount that will be paid out to any individual making a claim against the policy (for each accident) and the larger number represents the maximum amount that will be paid on any one claim in the aggregate. Individuals should consider whether the minimum coverage required by law in their state is sufficient to adequately protect them in the event that they cause an accident. After all, the insurance policy is there to protect personal assets from claims made by an injured party. As the costs of medical care have increased significantly over the years, it has become more and more likely that the value of claims will exceed the minimum limits required by law. As a result, if there is not sufficient coverage to adequately compensate an injured party, it increases the chances that an at fault driver will be sued and their personal assets put at risk.
Medical Payments Coverage
In the event that an individual is in an accident caused by another driver, their medical expenses hopefully will be paid from any settlement or judgment that is collected in connection with the claim. While bodily injury claims are pending, which can sometimes take a significant amount of time, the associated medical expenses remain unpaid and can take a financial toll. Medical payments coverage on a policy provides an amount that the insurance company will pay towards medical expenses associated with an accident, regardless of fault, and claims for such payments can be filed as soon as related expenses are incurred. These payments can offset out of pocket costs for injured individuals with health insurance coverage, as well as costs associated with out of network treatment providers or treatment received by injured parties without health insurance. The coverage usually is provided in the amounts of $1,000.00 to $25,000.00 or more. Insurance companies should be able to provide a breakdown of the additional costs associated with each level of medical payments provided.
Uninsured/Underinsured Motorist Coverage
What happens if someone is involved in an automobile accident caused by an uninsured driver, or someone who did not have adequate limits of coverage? In such a circumstance, the uninsured/underinsured motorist coverage on their own automobile policy would apply and their insurance company would likely provide coverage (almost as if they were the insurance company for the at fault driver); however, it is critical to be aware that many insurance companies will seek waivers of uninsured/underinsured motorist coverage to exclude the coverage from the policies of their insured drivers. Georgia law requires that an insurance company provide the coverage unless it is waived in writing (see O.C.G.A. § 33-7-11), so a waiver of such coverage is often “hidden” in the initial paperwork signed when signing up for insurance coverage or as part of a renewal in which lower premiums are offered if the coverage is waived. Individuals should always include this coverage, and confirm that the coverage is in place with limits of coverage that are adequate to sufficiently deal with any applicable claims you may have. If the event that an at fault driver is insured with inadequate limits of coverage, underinsured motorist coverage would apply. The limits of coverage for underinsured motorist claims are generally set up to either be offset by any coverage of an at fault driver or to add-on as additional coverage.
Another way to protect yourself against potential liability resulting from an automobile accident is to purchase an umbrella policy that provides additional coverage in the event that your limits of coverage do not adequately cover the losses associated with a claim. Most umbrella policies are relatively affordable, depending on the limits of coverage. This is, in part, due to the fact that the insurance company understands that the likelihood that the umbrella policy will be utilized is low; however, the peace of mind and financial protection afforded by an umbrella policy (when needed) can be priceless.
As financial and/or personal circumstances change in an individual’s life, the coverages included in their automobile insurance policies should be reviewed. The insurance policy’s declarations page generally will include an outline of the included coverage, limits of coverage and applicable premiums.
Note: The information contained in this article is based on the law at the time it was written. It should not be relied upon in lieu of representation by an attorney and is based on Georgia law. Nothing contained in this article, or its posting, should be construed to create any attorney-client relationship.