AUTO INSURANCE COVERAGE:
What should you know?
by
Attorney Richard P. Mozinski
Every six months, most of us receive our auto insurance bill. If you're like most people, the bill gets put in the stack of things to be paid. The sheet explaining what coverage you've purchased goes in a file drawer - sometimes it's read, other times not. After the initial auto policy is purchased, most people aren't concerned about the coverage - that is, until there has been an accident. Then all the fine print becomes important.
Wisconsin does not require automobile insurance unless your license has been revoked for some reason. However, if you do have insurance, Wisconsin requires you have 'minimum limits' of at least $25,000 coverage for one person's physical injury, $50,000 for all persons injured, and $10,000 to cover property damage.
Although Wisconsin generally doesn't require auto insurance, if you're in an accident that is your fault and you don't have auto insurance, you're in deep trouble. The Wisconsin Division of Motor Vehicles will issue an administrative ruling finding you are at fault and estimating the amount of money you owe to whomever you've struck. If you can't pay the estimated amount, your driver's license will then be suspended until you do pay. That suspension can last for years.
There are seven general coverages commonly purchased as part of an auto policy. They include bodily injury liability, property damage liability, uninsured motorist bodily injury, underinsured motorist bodily injury, medical expense, comprehensive, and collision. This article focuses on the first two. Others will be addressed in future articles.
Bodily Injury Liability
If you are in an accident that is your fault, bodily injury liability is the coverage you are most concerned about. Check your liability limits. Your policy will define those limits as either a dollar amount per injured person or for all injured persons in the accident.
The dollar figure stated as your 'limit' is the most your insurance company will pay on your behalf, no matter how much you may owe. Some policies still contain only Wisconsin's minimum limits. Given today's medical and hospitalization costs, minimum limits place your personal assets at risk. A hospitalization of even a few days will cost well into the thousands of dollars. If the injured person requires surgery, potential expenses are even greater.
Our law firm commonly represents people injured in auto accidents. We often find medical bills alone can be in the $10-50,000 range, occasionally higher. In addition to medical bills, someone you injure in an auto accident can claim money for lost wages, pain and suffering, and emotional distress. Their spouse or children can be awarded money for loss of society and companionship. When considering all these, minimum liability limits are easily exhausted.
Property Damage Liability
Property damage liability coverage is defined per accident. Similar to bodily injury liability coverage, this coverage applies only to damage to other vehicles or objects you struck, not your own vehicle. This coverage protects you from property claims when you are at fault in an accident.
Having enough property damage coverage is extremely important. The average cost of a new vehicle today is approximately double the $10,000 minimum Wisconsin limit. It is also important to remember accidents can take many forms. There can be multiple vehicle collisions or accidents where cargo or personal property damage occurs, in addition to vehicle damage. Property damage coverage also covers any buildings or other objects alongside the road which you may strike. Adequate property damage liability limits will protect you from these claims.
Legal Defense
Your legal defense is also included in your auto insurance policy. The cost of your lawyer is not only paid for by your insurance company, that cost does not reduce your policy limits. Legal costs are in addition to your limits. However, in exchange for paying for your defense, your insurance company is also granted the right to make all decisions related to your defense, what amount to pay someone you may have injured, etc. For example, assume you struck another vehicle and the other vehicle's driver suffered a broken leg. The other driver has $4,000 in medical bills, lost $1,000 in wages due to the injury, and is claiming an additional $15,000 in damages for pain and suffering. Total claim: $20,000. Your insurance company has the right to decide what it will pay for you to avoid litigation even though the $20,000 claimed is less than your policy limits. Your insurance company is not required to pay its limits unless it believes it has to. Accordingly, even if you think $20,000 is a fair amount, your insurance company may not. If your insurance company refuses to offer an amount that will satisfy the other driver, you may be sued. However, if you are sued, your insurance company will then be required to pay for your defense.
When you get your next auto insurance bill, take an extra few moments to review your liability coverage. If you aren't certain they are adequate, give your agent a call. He or she will help you decide on the best amount for your circumstances. Once an accident happens, it's too late.
For additional information: link to Radosevich, Mozinski, Cashman & Olson LLP