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“FULL COVERAGE” - WHAT DOES THIS REALLY MEAN?

Our firm has occasion to speak with many individuals involved in car, truck, and motorcycle accidents.  These individuals are often victims of negligent actions on the part of other drivers that have caused substantial injuries to them.  As we discuss the various factual and legal issues involved in their accident, we eventually discuss insurance coverages applicable to the accident.

Obviously, the individual that caused the accident is required under State laws to maintain a certain amount of liability insurance coverage.  The reality is that these minimum coverages often do not come close to covering the amount of damages caused by most automobile accidents.  This places the victims of negligent drivers at severe risk of not being fully compensated for their injuries.

Many times, I have to explain to an individual with a serious injury that the driver that hit them had inadequate insurance coverage to fully compensate them for their harms.  While the at-fault driver can be pursued personally for any damages beyond the liability insurance coverages, the collectibility of judgments in excess of insurance coverage is usually low.  Oftentimes, the cost of collections will outweigh the likelihood of success in finding other assets to satisfy these judgments.

There is an alternative available for every person to consider in order to avoid these gaps in coverages.  Each person has the opportunity to purchase underinsured motorist coverage when purchasing their mandatory liability and uninsured motorist coverage.  Uninsured motorist coverage applies when the at-fault driver has failed to comply with the State minimums for liability coverage.  If the at-fault driver has met the minimums but has insufficient limits to fully compensate the victim, the optional underinsured motorist coverage is available.

When an individual goes to purchase their own auto coverage, many insurance agents and companies don’t explain underinsured motorist coverage and oftentimes do not tout the virtues of this critical gap coverage.  Many people think that they have “full coverage” when they are, in reality, inadequately insured.  Explaining to most insurance agents that you would like “full coverage” often leaves underinsured motorist coverage unpurchased.  In my experience, most people do not carry underinsured motorist coverage because they do not understand the nature of this coverage and its benefits.  What is more sad is that it is relatively inexpensive to purchase this type of coverage.

If this coverage is vital and inexpensive, why don’t insurance agents and companies convince people to purchase this type of coverage.  The answer is because underinsured motorist coverage is not profitable for agents and companies.  Furthermore, because companies do not encourage their agents to sell this coverage, a lot of agents don’t understand the benefits of such coverage and, therefore, do not relay this information on to their clients.

Some States do include mandatory underinsured motorist coverage as a part of the State minimum requirements.  Unfortunately, the mandatory limits are similar to the liability coverage limits which are equally inadequate.

Pull out your policy and see if you have purchased underinsured motorist coverage.  If you have not, I would encourage you to contact your insurance agent and discuss this critical option.  Don’t fool yourself into thinking that you have “full coverage” when you are exposing yourself to potential hardship when someone injures you and has insufficient insurance coverages.

If you have been involved in an accident and have made a liability claim against the at-fault driver, but suspect that your injuries and damages may exceed that coverage, you should contact our firm immediately to discuss whether there are other types of insurance coverage that might be available to you.

This entry was posted on Monday, March 30th, 2009 at 7:45 am and is filed under Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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