For those of you that don’t know me, my name is Frank Julian and I
am an attorney at Sweeney Julian Trial Attorneys in South Bend, Indiana.
Our law firm handles cases throughout Indiana, although the vast majority
of our cases are in St. Joseph County, Marshall County, Elkhart County
and LaPorte County. My law firm only handles cases involving personal
injury, although we also help clients when car insurance companies misbehave
on fixing property damage claims.
Today I want to talk to you about car insurance. No, this is not a rant
about the evils of insurance companies. There is not enough time in the
world for me to go into the evils of insurance companies. Summary: they are evil.
Today I want to talk to you about car insurance in Indiana. Car insurance
is important because it’s required by Indiana law and it protects
you and others. Everyone who drives a car is one mistake, one second of
inattention away from financial ruin if they cause a car crash. Even if
you are a perfect driver, if you don’t carry the right type of insurance
you are one drunk driver or cell-phone talker away from having your life
destroyed. It is also important from a moral standpoint to ensure that if
you cause a crash that the people you hurt are taken care of financially.
OK, I will get off my soapbox and get down to some nuts and bolts.
First and foremost, the companies that advertise the most are not necessarily
the best insurance companies. I won’t name them here, but think of
three of the big insurance companies that advertise the most. If they
are the ones I am thinking of, you should think again. If you can’t
think of three, maybe ask your progressive friend Flo, or perhaps your
teammate with the good hands, or even a good neighbor. These companies
dump hundreds of millions of dollars to slap their advertising on everything
from television commercials to the nets that collect field goals during
the big football game.
Where do insurance companies get all that money to advertise? From you!!!!
Your rates are inflated so that they can pay for each of those Superbowl
ads and cute commercials with Hollywood actors. Of course, it doesn’t
hurt that they don’t pay claims fairly, either. Insurance companies
make profits that register in the BILLIONS. They make that money by charging
big premiums encouraging people to buy nearly worthless insurance policies,
and then failing to pay claims fairly when something bad happens.
Here are the basic parts of an automobile insurance policy:
1. Bodily injury liability coverage
2. Uninsured Motorist Coverage and Underinsured Motorist Coverage
3. Medical payments or Personal Injury Protection (PIP)
4. Property Damage Coverage, Collision Coverage and Comprehensive
Bodily Injury Liability Coverage.
When most people buy car insurance, think they have “comprehensive”
and then they think they are covered. WRONG!!!!!!!!! Looking at things
piece by piece, we first examine Bodily Injury Liability. This is the
part of car insurance that covers you if you injure another person while
using your automobile. It isn’t being over dramatic to say that cars
can be very dangerous things. When a car collides with another car or
motorcycle it is not uncommon for life altering injuries or death to occur.
It is not uncommon for medical bills from auto crashes to exceed $100,000.
Additionally, you are responsible for lost wages, pain and suffering,
disfigurement, disability and
future medical bills.
If you have a “state minimum” policy, you clearly don’t have
enough coverage. You are exposing yourself to financial ruin if you cause
a serious injury. Think about all those times when you made a bad decision
or took a phone call or looked away from the road for one second too long.
All of those times could have been the time your life changed forever.
Example: You are driving down the road one day, get a phone call and look
away from traffic for an instant. Traffic stops ahead of you and you rear
end the car ahead of you. The person driving suffers a herniation to the
discs in the neck. When all is said and done, they could be looking at
medical bills that exceed $150,000. When you add in damages like lost
wages, future medical bills, pain and suffering, lost earning capacity
and disfigurement, you could be looking at a court case that is worth
in excess of $500,000. If you have $25,000 dollars of insurance and the
jury comes back with a verdict of $500,000, you are on the hook for the
$475,000 of the verdict that exceeds that coverage.
Don’t have that kind of money lying around? Well, read ahead.
How much insurance coverage is enough? It depends on where you are in life.
In my opinion, EVERYONE should have at least a 100,000/300,000 policy.
(Gives coverage of $100,000 per person injured, $300,000 in total coverage.)
With medical bills the way they are today, this is really the minimum
coverage that is acceptable. If you shop around, you will find that getting
a 100/300 policy is not that much more expensive than a state minimum policy.
If you own more or make more, you need a serious automobile insurance policy.
You need a company that is going to offer you at least $250,000 in coverage.
If you have lots of assets or are a professional with a respectable paycheck,
you need more coverage and you will probably need an umbrella policy too
(which will be the subject of a future blog).
In the end, there is no substitute for talking to a professional, INDEPENDENT
insurance agent. Not a kept agent who only sells for one company, but
someone with the ability to offer you a range of products from a number
of different, reputable insurance companies. It’s not surprising that
most of the giant insurance companies don’t sell through independent
brokers. In my opinion this is because an independent insurance agent
would recommend buying from
anyone other than the big insurance companies.
Uninsured Motorist Coverage and Underinsured Motorist Coverage.
In a perfect world, everyone would carry enough car insurance. But, the
world isn’t perfect. Most people on the road today either have NO
INSURANCE or state minimum insurance policies. If they cause a wreck and
hurt you and your family you will be OUT OF LUCK.
How do you protect yourself? Well, you need to buy an insurance policy
that carries plenty of uninsured motorist (UM) and underinsured motorist
(UIM) coverage. In Indiana, insurers are required to offer UM/UIM coverage
in an amount that equals your bodily injury limit.
Uninsured motorist coverage pays for your (or a family members’) injuries
when someone without car insurance causes an accident or when you’re
hit by a hit-and-run driver. UIM kicks in when someone else causes an
accident but doesn’t have enough insurance to cover all your damages.
Underinsured motorist coverage is similar. It comes into play when you
are in a collision with another driver and they don’t have enough
insurance to cover your damages. For example, you are rear-ended again.
Your shoulder is badly injured in the collision and requires surgery.
You require surgery and you are off work for months. Your damages exceed
$200,000, but the at-fault driver had the Indiana state minimum coverage
of $25,000. If you don’t have Underinsured Motorist coverage, you
could be limited on what you recover.
Health insurance is not enough! It will pay your medical bills, sure. But
it won’t cover other damages like pain and suffering, lost wages,
disfigurement, loss of earning capacity or the loss of your ability to
function as a person. These damages are significant and can only be covered
if you think ahead!
Again, this is where careful planning with an independent insurance agent
is critical. You need to buy enough coverage to cover you if the worst
case scenario happens. With a good independent insurance agent, you will
be surprised to learn that a great insurance policy doesn’t cost a
heck of a lot more than a bad one.
Medical Payments Coverage
Medical payments (called MedPay) coverage pays for the medical expenses
suffered by you and your passengers after an accident. You’re also
covered if you’re driving someone else’s car (with their permission)
or from injuries suffered if a car hits you. MedPay will pay no matter
who caused the accident, although if someone else is at fault your insurer
may subrogate against them, meaning it will seek damages from the other party.
Why is this important? If you ever have passengers in your car and they
are hurt in a wreck, this coverage will pay for their medical bills. If
for whatever reason you don’t have health insurance, this coverage
will pay for your medical bills. And in today’s world, not every health
insurance company pays for every type of specialist or procedure. Medical
payments coverage will kick in to pay for accident related treatment that
may not be covered by health insurance.
Finally, medical payments coverage is cheap!! It doesn’t cost very
much to switch MedPay coverage from $1,000 to $25,000 or even $100,000.
For me is was the cost of a case a beer PER YEAR to switch from $1,000
to $100,000 of this important coverage. While I miss that beer, the peace
of mind is worth it.
Property Damage, Collision Coverage and Comprehensive
Property damage coverage covers you if you damage another person’s
vehicle. You have to be very careful when looking at this coverage. As
the years have gone by, property damage coverage amounts have stayed the
same. At the same time, the prices of cars on the road have skyrocketed.
My Ford Expedition lists new for over $50,000.
Many policies are sold with $15,000 or $20,000 of property damage coverage.
If you cause a wreck and total a 1990 Buick Riviera, you are safe. The
replacement cost of that vehicle is well under the $15,000 property damage
limit. But if you total a $60,000 Lexus, you are going to have to come
up with the extra $40,000.
Make sure you have at least $100,000 of property damage coverage. And also
say a prayer that you don’t hit a Porsche or a Bentley.
Collision coverage pays to repair
your own vehicle in the event of an accident. It also might pay for the fair market value
of your car if it is totaled. Your car is considered “totaled”
when the repair costs exceed a certain threshold of the car’s value.
Most car insurance companies are good about getting your car fixed. However,
insurance companies will attempt to play games on the “fair market
value” of your car if and when it is totaled.
Comprehensive coverage pays for all those weird types of damage to your
car that aren’t due to car crashes. For example, theft, fire, vandalism,
natural disasters and collisions with animals, and depending on the policy,
the windshield chip.
There are various ways to find the best auto policies while still saving
money. Don’t try to do it yourself, speak with local a independent
agent. Ask for a policy that fits your current life situation. Ask why
one company is better or worse than another. Call a personal injury attorney
to ask which companies pay claims fairly. Speak to people you know who
have been in collisions or made claims and find out how they were treated.
You may find out that your “good neighbor” or those “good
hands” were “progressively” awful to the people who were injured.
Finally, many state insurance departments release annual reports showing
the number of consumer complaints against each insurance company that
does business in the state. Indiana doesn’t do a great job at this,
mainly because of the gobs and gobs of money that Insurance companies
give to politicians. But you can look here to see a small portion of the
people who have filed complaints against insurance companies.