Do You Really Have Full Coverage Auto Insurance?
Working in a law firm, we see many individuals that are shocked after realizing that their auto policy is not what they thought. Many individuals believe or have been told by insurance agents that they have “full coverage” when in fact they may not have the coverage they need the most.
But what is full coverage auto insurance? According to the Ohio DMV, the term “full coverage” does not exist. A full coverage policy is typically one that includes several types of car insurance coverage that provide a solid level of auto insurance protection.
When looking for what type of coverages are right for you and your family, keep these coverages in mind and consider these options when building your “full coverage” policy:
- State-required liability coverage
- Collision coverage
- Comprehensive coverage
Additional coverages that are also important to consider for “full coverage” protection:
- Underinsured motorist coverage for bodily injury
- Uninsured motorist coverage for bodily injury
- Medical payments coverage
- Rental reimbursement
- Emergency roadside service
- Gap insurance coverage
What do These Coverages Mean and Which are Best for You?
State-Required Liability Coverage
The State of Ohio requires that all Ohio drivers have automobile liability insurance coverage of a minimum of $25,000 per person/$50,000 per accident and can go as high as your needs. Many Ohioans have a policy for $100,000 per person/$300,000 per accident.
What do these numbers mean? The first number represents the coverage provided to an individual that was hurt because the driver or owner of a vehicle was negligent and injured someone. The second number means the amount of liability insurance coverage provided to all the individuals injured in the same collision.
For example: Mary ran a red light and collided with a van carrying a family of five. The mother, father and three children were injured as a result of Mary’s negligence. In this example, the most any one person can recover is $100,000, but all five cannot recover more than $300,000 total. If the injuries are all similar, each of the five injured people would divide the $300,000. This is the per accident limit of liability. No matter how many people are injured and no matter how badly they are injured, they cannot collect more than $300,000 all total. This is the reason to have your own underinsured motorist coverage in an amount to protect you and your family. Having an umbrella policy in addition to your regular auto policy offers additional protection to you and your family.
If Mary don’t have enough coverage for this family, they will not be able to be fully compensated for their injuries and the driver or owners’ assets could be at jeopardy.
For this coverage to kick in, the damages must be as a result of a collision or an event that requires an object to collide with the vehicle. The definition section of your auto policy will control, so reading your policy is important for you to know when this coverage will apply.
This coverage may have specific deductibles, for instance, $100, $500, $1,000 or more. The higher deductible, the less the monthly payment. The deductible is paid by you, so always check your deductible before calling your insurance company. This coverage pays for things are not the policyholder’s fault. For instance, hail damage, weather related incidents, or a covered vehicle that has been broken into.
Additional Coverages That Are Also Important to Consider for “Full Coverage” Protection:
Underinsured Motorist Coverage and Uninsured Motorist Coverage-Bodily Injury
Much like the Liability and Collision coverage, this coverage applies to injuries from a collision that is NOT the policy holder’s fault. But, because the collision was the fault of a person with either NO auto liability coverage or they have a lower auto liability policy limit than what you have, this coverage will apply to the injuries of the policyholder and other members included on the policy. In Ohio this coverage is NOT MANDATORY, so you must make sure your policy has this coverage listed specifically.
For example: This time, Mary’s vehicle was hit after a van ran a red light. Her injuries required three surgeries to repair her broken arm, broken foot and broken wrist. Her bills exceeded $100,000. The van owner only had state minimum liability coverage, $25,000 per person/$50,000 per accident, which is not enough to compensate Mary for her medical expenses and injuries. Since Mary had an Underinsured motorist policy for bodily injury of $250,000 per person/ $500,000 per accident, Mary can recover from her own policy.
But, IF Mary did not have the underinsured motorist bodily injury coverage, even though she was really injured and required extensive treatment, she would ONLY be able to recover the state minimum coverage that was available by the van owner. Many people do not have assets that are collectable when they injure someone. The best thing you can do to protect yourself and your family is to have Underinsured/Uninsured Motorist Bodily Injury Coverage.
Medical Payments Coverage
This coverage is very nice to have, even IF you have health insurance. Because this coverage provides money to pay medical bills and out-of-pocket expenses immediately, instead of waiting for settlement from the at fault or Underinsured insurance company.
For example: Let’s use the same situation where Mary was hit by the van driver. Let’s say her health insurance has a high deductible and WILL not pay anything until her deductible is paid, so those initial bills, the EMS, Emergency Room, Radiology, ER Physicians bills remain outstanding. Even though the collision was not her fault, she would still have to pay those, unless she let them go to collection while sorting through the insurance maze. With medical payments coverage, usually $1,000-$10,000, she could get those balances paid immediately using this money. Mary could also get reimbursement for any medical supplies she had to purchase or be reimbursed for copays that she paid. This is a nice benefit to have on your policy when needed the most.
Rental Reimbursement and Emergency Roadside Service
These coverages, although offered separately, are also nice to have and are self-explanatory. Although, with the rental reimbursement coverage, make sure to understand the coverage. Some companies and policies vary with the coverages that are provided. May people think rental cars are free with the policy, while many are not and require either a daily amount owed or a limited amount of time that the rental is available. Review your auto policy for any limitations with these coverages.
Gap Insurance Coverage
With the increased cost for new and used vehicles, this coverage is important for anyone that has a loan on a vehicle. Ohio is NOT a vehicle replacement state. The insurance company places a lower value on your vehicle than you do, and they do not pay the same amount that a car loan company will loan someone for a car, when it is totaled in a car wreck. Gap insurance is very important to have if you have a loan on your vehicle. When purchasing a vehicle, ask the car loan company and your insurance agent about Gap coverage. Do not have a vehicle loan without Gap coverage.
How does it work? Say for instance, you have a 2013 Kia Soul. Your outstanding loan amount is $9,000.00, at the time of the collision and after it was totaled. If the insurance evaluation and final offer on your vehicle is only $7,000, you have a gap of $2,000.00. The insurance company needs the title to the car in order to total it out and provide you with the $7,000 check. You don’t have $2,000 sitting in the bank for a rainy day. You don’t want to get another car loan and add $2,000 to another loan just to pay off this car. So, this coverage will pay off the difference of $2,000 and you walk away free and clear from the debt of that vehicle. You just need to determine, in your situation, if it needed.
Remember, what one person considers “full coverage” may not be the best car insurance for you.
Look at your own personal needs, your vehicle, and your budget to determine what will work best for you. Research the insurance coverages you need before agreeing to pay for insurance coverage. You can shop around for auto insurance and ask other insurance companies what they offer and for what price.
This will offer peace of mind in case of an unfortunate event. Reviewing your auto policy coverage yearly is recommended.
Talk to an Insurance and Accident Lawyer