BETTER CAR INSURANCE COVERAGE series
- Bodily Injury
- UM/UIM
- Medpay aka Medical Payments
- Property Damage
- Bodily Injury
This is part one of a four-part series to help guide you to obtain better insurance for yourself and your loved ones in the event of a car accident. In this part we will cover the basics of your Bodily Injury policy limit.
The term “bodily injury” refers to the portion of your claim that involves injury to an individual’s body. The “bodily injury policy limit” is the maximum amount that is recoverable through that insurance policy for bodily injury. Any settlement under bodily injury will cover your attorney’s fees and costs, your medical treatment and your pain and suffering compensation.
In California, the minimum bodily injury liability requirement is $15,000 per person and $30,000 maximum per accident. Most people purchase insurance policies for this minimal amount. That means, if someone were to negligently crash into your vehicle and they have this minimal policy limit, chances are high that you will only be entitled to a total settlement of $15,000. Usually, after attorney’s fees and medical bills, client’s end up with approximately 1/3 of the settlement in their pocket.
My recommendation is that you have at least $100,000 per person per accident. To find out the details of why, check out part II of this series.
- Uninsured or Underinsured Motorist
In this part of the series, we will go over Uninsured and Underinsured Motorist coverage and I will give you my recommendation on how to get yourself better insurance. This type of coverage applies if the person at fault is uninsured or their insurance policy does not have enough money in it to cover your damage. This coverage cannot be higher than your bodily injury policy limit.
Uninsured Motorist coverage kicks in when someone negligently causes an accident and they do not have insurance. Checks will be run to find out if the other person has any insurance registered with the DMV and if they do not, then your uninsured motorist coverage will kick in. Hit and runs can be tricky and will require some sort of evidence that another party did in fact hit your vehicle and fled the scene. This can be accomplished with a police report, surveillance footage or a non-biased witness.
Underinsured Motorist coverage is applicable when another party is at fault for an accident, but their insurance does not cover all of the bodily injury damages. If someone with a minimal policy (e.g. $15,000 per person/$30,000 per accident) is at fault for crashing into you and your medical bills come out to $30,000, your underinsured motorist coverage will kick in and you may be able to recover the maximum policy limit from the other party ($15,000 per person) as well as your underinsured motorist coverage.
What amount should you get for your Uninsured/Underinsured motorist coverage? The maximum coverage for this portion of your policy will likely mirror the amount of your bodily injury policy limit. If you have a minimal policy of $15,000 per person, then the maximum you can select for your uninsured/underinsured coverage is $15,000. Just like the bodily injury recovery, the uninsured/underinsured coverage will pay for your attorney’s fee and costs, medical treatment and your pain and suffering compensation.
My recommendation is that you bump up your bodily injury and your uninsured/underinsured motorist coverage to at least $100,000 per person. By doing this, you will allow yourself to recover up to $100,000 for any accident that is not your fault, even if the other party has minimal or non-existent insurance.
- Medical Payments
For part III, we are going to go over Medical Payments aka Medpay and discuss what options you have.
Medpay is an amount of money that your insurance will provide for medical bills (not pain and suffering regardless of who is at fault. Medpay is voluntary coverage that is usually offered for $5,000 per accident and the cost is relatively low on your insurance premium. It applies to you and your passengers and can cover massage, chiropractic care, and most other modalities as long as it is reasonably related to your car accident.
If you have Medpay on your policy, your attorney will be able to work with your insurance to get medical bills paid, which ultimately increases the amount of money from the settlement that goes into your pocket.
Some Medpay policies are “excess” coverage. This means that your health insurance must first pay for anything that they cover before Medpay kicks in. The car insurance will require an Explanation of Benefits from your health insurance which is another hoop to jump through that could possibly get denied. Get primary Medpay and not excess Medpay.
I recommend getting primary Medpay on your policy for at least $5,000.
- Property Damage
In part IV, we are going to discuss Collision and Car Rental coverage. Just like most people in California have the minimum amount required for bodily injury, they also have the lowest amount required for property damage coverage, which is $5,000 per accident. If one person causes a three-vehicle accident, that $5,000 is supposed to cover all of the property damage for both of the other vehicles.
Collision coverage will allow you to repair your vehicle while you only pay the deductible. By obtaining collision coverage, you will be able to repair your vehicle immediately without having to wait for the other party to accept liability. If you have a luxury car, there are luxury prices to fix that car so budget accordingly.
Car Rental coverage is an option on your insurance policy and you can select the amount of a daily coverage for a car rental. The base car rental coverage is usually start around $45 per day which will get you a basic vehicle rental. If you need a truck to go to work, ensure that your car rental coverage will be enough to pay for that truck.
Of course, we want the other party to pay for your property damage and your car rental while your vehicle is being fixed. However, the other party’s policy may be limited or they may delay in accepting liability. By utilizing your own Collision and Car Rental coverage, you speed up the process to fix your vehicle and the only cost to you is your deductible. After the other party accepts liability, the other party’s insurance will reimburse your insurance company through a subrogation process.
I recommend obtaining Collision coverage with the lowest deductible that you can afford on your policy. Also, select Car Rental coverage that is suitable to your needs.