The Top 2 Things You Need to Know When Reviewing Your Auto Insurance Policy

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It’s almost the New Year, which means it’s time to reflect on the past and make New Year’s resolutions to make your next year all the better; this includes a review of your current auto insurance policy. That’s right – the holidays are the perfect moment to make sure you aren’t overlooking anything in the upcoming year that would protect your ass–sets from liability.

The first thing you should do is check out your policy to make sure that you have:

 

Do I have enough Bodily Injury coverage (BI)?

Bodily injury liability provides coverage in case you cause an auto accident in which another person (or people) is hurt. It covers the damages that you’re legally responsible for, and provides a legal defense if someone sues you for damages.  There is no legal requirement in Florida that a person have bodily injury liability coverage.

Bodily Injury liability limits are typically shown like this: $50,000/$100,000.
The first number represents the highest amount any one person could be paid arising out of one accident.  The second number represents the total amount of money it would pay out for that one accident, regardless of the number of claimants.

How much coverage do I need?  When choosing your Bodily Injury liability limits, you should consider all of your assets, including your home and future earnings. Why? Because if you don’t have enough coverage to protect all of your assets, those assets could be at risk if you’re liable for damages that exceed your coverage limit.

 Do I have Under-insured/Uninsured Motorist Coverage (UM/UIM)?

 As the name suggests, an uninsured driver is someone without an auto insurance policy. But, what does it mean to be under-insured? Let’s say you’re involved in a crash in which the other driver is at fault. You find out the other driver only has $10,000 in bodily injury liability limits and it’s not nearly enough to cover your medical bills for your injuries. In this case, the other driver would be considered under-insured—meaning that they have an auto insurance policy, but it’s just not enough to cover all of your damages.

UM/UIM coverage is designed to help you pay for bills and damages associated with a crash that was caused by another person who either doesn’t have an auto insurance policy or has a policy with liability limits that are too low to cover the costs and all damages associated with a covered loss.

This is something you’ll need to think about, as the limits for uninsured and under-insured motorist coverage can range from $10,000 to over $1 million. Some people choose a limit equal to their bodily injury liability limit, but that’s not always a requirement. For help deciding, you may want to consider a number of factors, including what kind of health insurance you have and whether you have access to short- and long-term disability through your employer to ensure you don’t lose out on wages if you’re too injured to work.

What does UM/UIM Insurance typically cover? With this policy, your insurance company basically steps into the shoes of the at-fault driver, therefore, it covers the same damages as bodily injury liability insurance: past and future medical expenses, past and future lost wages and, if you are permanently injured, past and future non-economic damages like pain, suffering, scarring, disfigurement and loss of the ability to enjoy life.

In addition to injuries to the driver or car owner who has UM/UIM, the bodily injury portion of uninsured and under-insured motorist coverage may also cover injuries to your passengers or family members who are driving the vehicle at the time of such a crash. UM/UIM coverage also follows the insured.  For example, if you are a passenger in your friends car and an under-insured motorist injures you when he crashes into your friends car, your policy will cover your damages not covered by the at-fault driver to the limits of your UM/UIM policy.

The Insurance Research Council estimated in 2011 that chances are about one in seven that a driver in the U.S. is uninsured. With that in mind, you should talk to an auto insurance agent today about your options to protect yourself.

Let’s start off the New Year with the great feeling that at least one of your resolutions was actually done!