In this article, Jackie Houser of Flexner Houser Injury Law shares advice about the automobile insurance coverage you need to protect you and your family from disaster. You cannot literally prevent bad things from happening, but through knowledge and preparation you can prevent bad things from causing catastrophic financial burdens to you and your family.  

When thinking about this article, I wondered why so many people have crappy (pardon my French) auto insurance.  Daily, folks come to my office and boast about having “full coverage” and when I ask them “What does that mean?” they cannot explain it.  Well, what it doesn’t mean is that you have collision coverage or rental coverage or underinsured motorist coverage or medical payments coverage or anything above the North Carolina statutory minimum of $30,000 per person and $60,000 per accident for your liability.  I suppose “full coverage” must mean that you’ve purchased the full minimum amount required by North Carolina law, which provides about as much protection for you and your family as purchasing a home without a roof. 

So, why do we do that?  Well, the marketing gurus in New York City skyscrapers have convinced Joe Citizen that he doesn’t need an insurance agent (just like insurance companies have convinced injured people that they don’t need an attorney—but that’s another article). Instead, regardless of his education level or knowledge of insurance products, Joe Citizen can just go online and “name your price” for automobile insurance. And, even better, in 15 minutes or less he can save $600 per year.  Approximately 40% of U.S. consumers purchase their insurance online without the assistance of an insurance agent.  If your family is like mine, when it came time for my kids to purchase their own insurance, I gave them a copy of my declarations page and said, “Go get the same coverage,” and that is great advice as long as the same coverage actually provides more than the minimum coverage (see “full coverage” above).

Between my ears I can hear some reader of this article saying, “Well, you’re a lawyer and you make a gazillion dollars so you can afford to have these expensive insurance policies.”  So, to quiet the voices in my head, let me clarify that (1) I do not make a gazillion dollars and (2) I have not always been a lawyer.  My first career was as a paralegal, where I worked for 20 years. I then taught paralegal students in a community college for six years and only then did I go to law school, enrolling when I was a 42 year old single mother of two teenagers.  

Because I was a single mother, my kids could not get their driver’s license until they could afford to help pay for the auto insurance; and we all know how expensive it is to insure an inexperienced driver—and I had two who were 19 months apart.  Even still, because of my work with auto accidents, I would not let my kids purchase the statutory minimum coverage because I knew that to “name your price” was only a good deal if I (or my children) were never involved in an automobile accident—and the odds were not in our favor. (As per the National Highway Traffic Safety Administration, seventy-seven percent of Americans will be involved in a car accident during their lifetime.) 

Everyday people walk into my office with catastrophic injuries requiring surgery or disability ratings or preventing them from returning to the vocation they enjoy, and the only thing that makes these disasters even more tragic is when my client has opted for the ambiguous “full coverage” that doesn’t include medical payments coverage to immediately put money in their pockets, or underinsured motorist coverage to protect against those who only carry the minimum statutory limits (see “full coverage” above).  

For example, your son gets in a car wreck tonight. It’s a head-on collision. He has a closed-head injury. There are emergency surgeries to relieve the pressure on his brain. He spends a few weeks in ICU and then a few more weeks at a rehabilitation facility to learn to walk again.  He has to learn to walk and talk and feed himself and dress himself.  

The wreck did not take his life but his physical injuries are permanent and his damages are significant.  The at-fault driver had the statutory minimum (or “full coverage”) of $30,000 per person or $60,000 per accident, which means the maximum your son will recover from the at-fault driver is $30,000.  This amount will cover his medical bills, pain and suffering, scarring, and permanent injuries. Hopefully you can see that $30,000 is not going to be a sufficient recovery for your son.  So then we look to your coverage.

What kind of insurance coverage do you have to make up the difference?  Do you have medical payments coverage?  Because an extra $5,000 or $10,000 would be quite helpful.  Do you have underinsured motorist coverage?  Meaning, do you have more than the statutory minimum of $30,000 per person or $60,000 per accident?  If not, then your son has experienced another tragedy at your own hands.  

I realize it is so enticing to name your own price. Whether it’s haggling over an item at an auction or getting the best deal on a car, it always feels good to see the price go down. But, when it comes to naming your own price for car insurance, there comes a point where too little spent means too little coverage.  The statutory minimums—which do not require medical payments coverage or underinsured motorist coverage--leave you and your loved ones susceptible to potential financial hardships down the road. 

My advice is that you contact your insurance agent—or hire one—who can help you navigate your family’s auto insurance needs.  When I am working on my cases, I review my own client’s insurance policy along with that of the at-fault party.  I am not only taking note of the at-fault party’s policy limits, but I am also searching for whether my client has collision coverage, rental coverage, medical payments coverage, and underinsured/uninsured motorist coverage because I want my client to recover the maximum amount that they deserve for their injuries, which may mean we exhaust the coverage of the at-fault party and then pursue an underinsured motorist claim.  So, when you contact your insurance agent about these coverages, here’s some insight to help you feel more prepared for the discussion about coverages.

Medical Payments Coverage

Medical payments coverage is a supplemental coverage that helps with medical expenses (and funeral expenses) for you and any passengers in your vehicle at the time of the auto collision. It also covers you if you are a passenger in your vehicle or another vehicle or if you are a pedestrian struck by a vehicle.  

For example, when you and your spouse and your two kids are injured in a car accident, then all four of you can recover medical payments coverage. So, if you had $10,000 per person per accident medical payments coverage, then your family of four in the vehicle could recover up to $40,000 for reasonable medical expenses (or funeral expenses) related to injuries caused by the collision.  

So, it must be expensive, right?  Wrong!  Medical payments coverage is likely the cheapest coverage on your auto insurance policy.  Most auto insurance policies offer medical payments coverage in the following increments: $1,000, $2,000, $5,000, or $10,000.  For example, I have $25,000 medical payments coverage that currently costs $62 per year (which is less than one cup of coffee per month).  One of my kids pays $30 per year for $2,000 in medical payments coverage (which is $2.50 per month).  

And, if you are in the middle of your seven years of bad luck and find yourself in one unfortunate accident after another—no matter how careful you are on the road, remember your medical payments coverage is applied per accident. It’s just too cheap and the benefits are too great to not consider, and I hope you will.  

Underinsured/Uninsured Motorist Coverage

Uninsured and underinsured motorist coverage provides an extra layer of financial assistance for injuries and damages caused by an at-fault driver when they have insufficient insurance coverage (underinsured) or none at all (uninsured). Think of it as a “back-up plan” in the event of a crash. 

According to the Insurance Information Institute, approximately 20% of vehicles on the road are uninsured (depending on the state of residence). If you are injured or your vehicle is damaged in an accident with an uninsured or underinsured driver, you could end up paying for medical bills or vehicle repairs out of your own pocket if you do not have enough coverage. 

In North Carolina, all auto insurance policies are required to include a minimum uninsured motorist coverage of $30,000 per person/$60,000 per accident/$25,000 per property damage. That means if you are involved in a collision with an uninsured vehicle, you can recover up to $30,000 from your uninsured motorist coverage.  Another example to consider is you are involved in a collision caused by an uninsured vehicle, and you and your family all suffer serious injuries.  With the minimum coverage required by North Carolina, the most that can be recovered is $30,000 per person or $60,000 for all bodily injury claims (or fatality claims) in your vehicle regardless of the number of passengers in your vehicle. (For example, a former client was airlifted from the scene of an accident and the bill was $65,000.)

Additionally, auto repairs are incredibly expensive as our vehicles have become more sophisticated and complex. You have to consider whether $25,000 is going to be sufficient to replace your vehicle or pay off your car loan because if you owe more than $25,000 on your vehicle, then common sense dictates you need more than $25,000 in underinsured property damage coverage to protect your assets.

We’ll give more in-depth examples on November’s Laughter and The Law podcast coming soon.  Please tune in or email anytime if you have specific questions about your auto insurance coverage.  I am not an insurance agent, but I do have some strong opinions about protecting yourself and your passengers.