PROTECTING YOURSELF, YOUR FAMILY, AND YOUR ASSETS FROM LOSS THROUGH INSURANCE |
people realize that they need health insurance to safeguard against illness and injury, and most also realize that they need automobile insurance if they are going to own a car. However; very few people actually sit down and take the time to determine how much insurance coverage they should purchase. The two most common (and most important) types of insurance coverage that almost everyone will need at some point in their lives are automobile and homeowner's liability insurance. STATE LAW REQUIRES COVERAGE Generally, state law requires that the owner of an automobile obtain liability insurance. Homeowner's liability insurance is generally required by the lender. As with any other product or service, there are many companies to choose from and many options available. Each state imposes a statutory minimum amount of coverage. The minimum varies by state. Sometimes the minimum statutory coverage is not adequate to cover a loss. DETERMINING HOW MUCH COVERAGE TO PURCHASE When purchasing liability coverage, it is important to purchase enough homeowner's and automobile insurance coverages to guard you against loss to your dwelling, personal property, your vehicle and to protect yourself from claims made by third parties against you for any negligent acts that you, someone in your household, or someone using your car may commit. It is also important to purchase adequate uninsured/underinsured motorist coverage to protect because a third party that causes injury to you person or property may be uninsured or not have enough coverage to fully compensate you for your injury. The amount of coverage that you need depends upon the value of the assets that you stand to lose should a third party win a judgment against you. As a general rule, individuals should have liability insurance coverage that totals approximately three times their family net worth. The higher your liability insurance limits are, the less likely you are to risk your personal assets due to your negligence. MINIMUM AUTOMOBILE INSURANCE COVERAGES Below are our recommended minimum amounts of the different types of automobile insurance coverage available: $100,000.00 per person Bodily Injury Liability, $300,000.00 per accident Bodily Injury Liability, $100,000.00 Property Damage Liability, $ 25,000.00 Medical Payments Benefits, $ 10,000.00 Loss of Income Benefits (If available), $100,000.00 per person Uninsured/Underinsured Motorist Bodily Injury Liability, $300,000.00 per accident Uninsured/Underinsured Motorist Bodily Injury Liability, $ 50,000.00 per accident Uninsured/Underinsured Motorist Property Damage Liability.
$300,000.00 per person Bodily Injury Liability, $500,000.00 per accident Bodily Injury Liability, $300,000.00 Property Damage Liability, $ 50,000.00 or Maximum Coverage Available, PIP/Medical Payments Benefits, $ 10,000.00 Loss of Income Benefits (If available), $300,000.00 per person Uninsured Motorist Bodily Injury, $500,000.00 per accident Uninsured Motorist Bodily Injury Liability, $100,000.00 per accident Uninsured/Underinsured Motorist Property Damage Liability. Additionally, the purchase of $1,000,000.00 in personal liability umbrella coverage and $1,000,00.00 of additional uninsured/underinsured motorist bodily injury coverage will provide protection to all but the wealthiest of households. This type of coverage usually costs less than $350.00 per year. BODILY INJURY LIABILITY COVERAGE Generally, automobile insurance provides coverage in the event you are liable to another person for bodily injury or property damage. Automobile liability coverage is mandatory in every state. Some states also require mandatory Personal Injury Protection (PIP) or medical payments (Medpay) coverage. In some states, such as Georgia, Medpay is optional coverage. MEDICAL PAYMENTS OR PERSONAL INJURY PROTECTION COVERAGE PIP/Medpay pays for medical treatment and expenses arising from automobile injuries. It does not matter whether you or the third party were at fault. PIP/Medpay is important because it will provide you with a way to pay for medical treatment if you do not have health insurance coverage. If you do have health insurance coverage, then it will allow you to be reimbursed for things that the health insurance did not pay such as co- payments, prescriptions, out-of-network doctors, etc. LOSS OF INCOME BENEFITS Most automobile insurance companies also offer some form of Loss of Income Benefits. This type of coverage usually reimburses you up to a certain percentage of your income lost due to injuries suffered in an automobile accident. Loss of income benefits allow an insured to recover for loss of income immediately, rather than having to wait until the time of settlement or judgment against the defendant. This coverage is helpful in situations where your injuries cause you to miss several weeks of work and you do not have sick pay or short term disability insurance. UNDERINSURED/UNINSURED MOTORIST COVERAGE Uninsured/underinsured motorist (UM) liability coverage is important to allow the insured to make a claim against their own policy in the event that a defendant who may cause damages or injury to the insured may not have insurance coverage or may not have adequate insurance coverage. You should always try to purchase the purchase the maximum amount of uninsured/underinsured bodily injury coverage available. Uninsured/underinsured motorist coverage is just as important to you as liability insurance coverage. For example, suppose a third party was following too close and crashed into your car. You suffered serious injury that required emergency room treatment. You also saw a specialist, who recommended that you undergo physical therapy. You endured serious pain and suffering while recuperating and you missed three weeks of work going to doctor's appointments, physical therapy, and resting from your injuries. Your medical bills totaled $20,000.00. The person who crashed into you only had $15,000.00 in bodily injury liability coverage. As you can see, the person that hit you is already underinsured by at least $5,000.00. When you include your out of pocket expenses and damages for your pain and suffering they are underinsured by a substantial amount. But if you have $100,000.00 in UM coverage, your UM policy steps in and provides you with an additional $85,000.00 in coverage in which to satisfy your claim. You arrive at this figure by subtracting the third party's liability coverage ($15,000.00) from your UM Coverage ($100,000.00). If the third party had no insurance, then you would have $100,000.00 in UM coverage to satisfy your claim. HOMEOWNER'S LIABILITY COVERAGE If you own a home or you are renting a home or apartment, you should purchase liability insurance coverage with your homeowner's/renter's policy. A minimum coverage of $300,000 single limit is adequate, but coverage of $500,000 single limit is preferable. You can also purchase medical payments coverage that pays for medial treatment of someone injured while on your property. We suggest the purchase of the maximum medical payments coverage available. Homeowner policies also provide coverage for loss of personal property in the home and replacement costs of the structure should it be destroyed. Obviously, the amount of coverage for loss of personal property depends on the value your property. This coverage is usually sold in large increments such as $10,000.00, $30,000.00 and $60,000.00. Certain items such as jewelry, collectibles, and antiques are often excluded and you may need to purchase additional coverage for these types of personal property. The replacement cost coverage usually covers only the structure because the actual land that a home is built on rarely goes down in value. It is important to make sure that you have a detailed and thorough appraisal of your home performed and that you can document any custom items or upgrades in the home. HOW DO I KNOW IF I HAVE ENOUGH INSURANCE NOW? One way to determine if you have adequate coverage is to gather all of you insurance polices and have them reviewed by an insurance agent. You will have to have some idea of your net worth in the present and in the immediate future. Ask your agent to make a recommendation on the amounts of coverage that they think you should have to protect your assets and then ask them to prepare a proposal from two different insurance companies for those amounts. Ask them to put their recommendations in writing. Insurance, like any product or service, can be comparison shopped. Price is often a factor in determining the amount of coverage you can afford and which company to buy from. However, price alone should not be the determining factor. Most insurance companies offer very similar products and the difference is in how they treat you when you have to file a claim. Ask friends and neighbors if they have any experience filing claims or being reimbursed for claims with their insurance companies. The money you save over a few years may be nothing compared to the stress, delay and grief that you suffer because of poor service in handling a claim. The above contains general information and is not tailored to a specific legal problem; it should not therefore, be considered legal advice. Do not try to use this information without consulting an attorney to learn how the law affects your unique circumstances. |
| Deming, Parker, Hoffman, Campbell & Daly, L.L.C. |
| Attorneys At Law Since 1974 |
| 770-564-2600 Metro Atlanta 912-527-2000 Savannah |
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| Copyright ©2008 by Deming, Parker, Hoffman, Campbell & Daly, L.L.C. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include the above copyright notice. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. |
