Q: How much insurance do I need?
A: Last week I wrote about being involved in an accident and how the other party’s limits may affect how much you can settle for. But is there a way around this? The short answer is yes.
In California, most people are familiar with the basic insurance coverages: collision, comprehensive and liability. But there is a more important coverage: uninsured motorist coverage.
Collision and comprehensive pay to fix your car. Liability pays another person whom you injure or whose property you damage. But uninsured motorist coverage protects YOU!
Here is how this works: You are driving down the street and get rear-ended by a driver who does not have insurance. Estimates put the number of uninsured drivers in California at over 25 percent.
So when this driver hits you, you end up having to go to the doctor and miss time from work. If the other driver had insurance, you would just have his insurance pay for your damages. But since he has no insurance, you need to use your uninsured motorist coverage.
The insurance company is required to offer you uninsured motorist coverage up to the limits of your liability coverage. So, if you have $15,000 of liability coverage, you can only have $15,000 in uninsured motorist coverage. If you have $300,000 of liability coverage, you can have $300,000 of uninsured motorist coverage.
Uninsured motorist coverage is one of the cheapest coverages you can have. But it provides you with the most protection. The increase from $100,000 to $300,000 is very small for the amount of coverage you get.
Additionally, by increasing your limits, you also raise the possibility of having an underinsured motorist claim – a claim where the other driver has insurance, but not enough to pay for your damages in full. This lets you make a claim for the difference between your uninsured motorist limits (say $300,000) and his liability limits (anything under $300,000).
Remember, uninsured motorist coverage protects YOU. I have written about this in my book, “Consumers Guide to California Auto Insurance.”
I have offered any insurance agent a free lunch if they can prove me wrong with this statement: This is the most important coverage you can have on your automobile policy. So far I have never paid for lunch.
Make sure you and your family are properly protected.
The answers in this column do not represent legal advice and do not enter you into an attorney client relationship with the individual answering the questions. If you have a legal issue it is recommended that you contact an attorney.
About the author: Jonathan Stein is an attorney based out of Elk Grove with over 11 years in his own practice. For more information visit jonathanstein.com