What are the Different Types of Auto Insurance Coverage?
Some of the most common types of auto insurance coverages are:
- Property Damage Liability – This provides coverage for all property damages the insured is legally obligated to pay due to an accident. Louisiana law requires a minimum of $25,000 in property damage coverage.
- Bodily Injury (BI) – Bodily Injury provides coverage for death or serious and permanent injury to others when you are legally liable for an accident involving your automobile. Louisiana law requires a minimum of $15,000 per person and $30,000 per accident.
- Medical Pay (Med Pay) – This covers medical treatment for the insured or resident family member resulting from an auto accident, regardless of fault, as well as any person occupying the covered auto. This is not a required coverage in Louisiana.
- Uninsured Motorist (UM) – This is coverage provided to the insured, resident family members, and any other person occupying the covered automobile for bodily injury resulting from an accident involving an uninsured or under-insured driver. This is not a required coverage in Louisiana.
- Comprehensive Coverage – This is coverage for your own property damage in case of an uninsured, underinsured, or self-caused accident. While this coverage is not required by Louisiana law, if your vehicle is financed then the bank/credit union/loan provider typically requires comprehensive coverage to protect their interests.
Should You Get Uninsured Motorist (UM) Coverage?
Joe goes into his insurance agent’s office to purchase auto insurance on his new car. He purchases “full coverage” with liability limits of $100K/$250K. His deductible is $1,000 per month. When his agent asks him if he wants UM ("Uninsured Motorist") coverage for an additional $800 per month, Joe scoffs – what is UM coverage and why would I almost double my bill? Plus, Joe has medical insurance to cover his bills if he should be injured in an accident, so why would he need to pay extra for that?
Jane is in the same situation. Except, when she is asked if she wants to buy UM coverage, Jane says, “Yes!”
Jane knows that UM coverage provides her protection in case of an injury where (1) the at-fault driver has no insurance or (2) the at-fault driver does not have enough insurance.
And, another 40% only have the state minimum coverage of $15,000 per person and $30,000 per accident.
So, Jane knows that in a state where 65% of drivers have minimum coverage or less, she must protect herself by purchasing UM coverage.
UM coverage provides you additional coverage for any injuries sustained in a wreck when the at-fault party has no coverage or not enough coverage.;
Even if you’re the most skilled driver ever, you can’t control other drivers on the road.
Too many times, negligent drivers end up not having enough insurance to cover claims for the people they injure.
UM coverage gives you the ability to take personal responsibility knowing that others fail to do so.
How Much Liability and Underinsured/Uninsured Motorist Coverage Should You Carry?
Recently, we had an opportunity to review one of our client’s personal insurance policies, and two things immediately jumped out – we wanted you to be aware in case you are in the same boat!
First, the client did have uninsured/underinsured motorist (UM) coverage. This is coverage you purchase to protect yourself and your family in case another driver either does not have insurance or does not have enough insurance to pay your damages. Most people skip this coverage because it does cost extra and is not required. So, good for the client having this coverage. However, the client only had minimum limit UM coverage (which in Louisiana, is tied to how much liability coverage a person has). And, that was because of reason two.
THE CLIENT HAD ONLY MINIMUM COVERAGE. I understand - minimum coverage is cheaper and it is all the State of Louisiana requires you carry. But, should you?
I am not an insurance agent and I know insurance in Louisiana is expensive. But, I also know that even minor car collisions can result in thousands of dollars of medical bills, pain and suffering, lost wages, and other economic and non-economic damages.
Plus, if you are not adequately insured and have substantial assets (like a house, bank account, stocks, mutual funds, boats, camps, etc.), a judgment in excess of the insurance policy can require you to personally pay the amount over the insurance policy. Who wants that? All you worked for – gone because of a car crash!
Plus – and this is why it’s important to evaluate how much insurance you carry – the more liability coverage you carry, the more UM coverage you can carry. Why is this important? Most drivers in Louisiana only carry the minimum.
I’d recommend getting way more than the minimum $15,000 in UM coverage. After all, a single surgery or a night in the hospital can land you a bill higher than $15,000 even with the best health insurance.
Remember all those medical bills, pain and suffering, lost wages, and other damages we talked about before – if you are seriously hurt in a crash because of another driver and they only have the minimum and you only have the minimum – will you be able to recover financially?
What about the case of the stay-at-home mom whose spouse, the primary wage earner of the family, was killed on his way to work?
Or the truck driver injured so badly that he could never work again and needs ongoing in-home care? Would 15K begin to cover that?
I cannot tell anyone what specifically they should carry as their coverage, but this is what I generally recommend – carry as much insurance (liability and UM) as you can afford. All it takes is one bad crash for your policy to pay for itself 10 times over.
Unfortunately, if you don’t, all it takes is one crash for you to lose everything you’ve worked for.
How Does UM Coverage Protect You?
Uninsured Motorist coverage also gives you some legal protections in case of an injury.
Your UM insurer owes you a duty of good faith and fair dealing.
Your UM insurer will be required to pay on your UM claim once you prove:
- the uninsured or underinsured status of the owner or operator of the automobile that caused the accident;
- the fault of the owner or operator of that automobile;
- the damage resulting from such fault; and,
- the extent of those injures.
Send your UM insurer your medical records proves your damages and injuries. Once the UM insurer receives proof of your claim, it has 30 days to pay you the limits of your UM policy or make an “unconditional tender.” An unconditional tender is a “no-strings-attached” payment on your claim based on the extent of your damages.
If your UM insurer fails to abide by its duty of good faith and fair dealing, the UM insurer can be assessed penalties and attorney fees.
Do you have UM coverage? For a FREE automobile policy review to see if you are protecting yourself and your family, please write to Loyd at [email protected].
If you have been in an auto wreck and suffered a disabling injury, let our team help you navigate the process. We excel at fighting back against bullies who want you to accept less than you should! Call us today at (985) 240-9773.