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What should I know about auto insurance
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What are the minimum auto insurance coverage
required by Illinois laws?
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Do I need uninsured motorist coverage as part of my
auto insurance policy?
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Do I need an umbrella liability insurance policy?
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Will my insurance company drop me if I make a claim?
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Does my insurance provide coverage to persons that I
lend my car to if they are not named on my policy?
1. What should I know about
auto insurance
In auto insurance, there is
first party coverage and third party coverage. First party coverage
covers you and your property (such as medical expenses, damage to your
vehicle and the insurance company's duty to defend you in the event that
you are sued as the result of your operation of a vehicle, etc.). Third
party coverage is for your responsibility to pay for injury caused to
other people, whether in your vehicle, or another vehicle involved in
the accident. The coverage (and its exclusions) is set forth in your
insurance policy. In exchange for the payment of a premium, the
insurance company promises to provide compensation in the event of
certain occurrences. You can speak to an insurance representative to
find our more about the options available to you, and their costs..
Before purchasing auto insurance, it is a good idea to shop around and
buy the coverage that best suits your needs at the most reasonable
price. You may wish to consider factors such as customer service, claims
paying ability, claims payment record, general reputation and
independent rating organization's ranking.
In determining what Liability
Limits you should purchase, you need to consider the amount of exposure
that you have. As a general rule, the more property and wealth you own,
the greater your exposure is, and the greater the need for protection
against claims from third parties. Often, liability limits are set as a
combination of numbers, such as 15/30, which means coverage of loss of up
to $15,000 per person and up to $30,000 for all injuries which occur in a
single accident. Many states require a minimum amount of third party
liability insurance be purchased before a you may drive a vehicle on
public roads. This is referred to as the minimum liability limit. Often
the minimum liability limit is inadequate to protect all of your property
and wealth. Increased limits, such as 100/300 or 300/500 are very common
and can be purchased at modest addition cost to you.
Your vehicle itself can be
covered in several different ways. Comprehensive coverage provides
coverage for loss to your vehicle due to certain proximate causes (such as
fire, theft, vandalism, and acts of nature). Collision covers damage to
your vehicle in the event that it collides with another vehicle of object,
often regardless of who is at fault in the event of an accident. Both
comprehensive and collision coverage may be subject to a deductible, that
is, damage to the vehicle must exceed the deductible amount before the
insurance company will pay you for a covered loss. Deductibles for this
coverage are available is various amounts, generally the greater the
deductible, the lower the premium for the coverage.
Most insurance policies
require Notice of Loss be provided to the insurance company. When you are
involved in an accident, the terms of most insurance policies state that
you must contact your insurance company and tell them about the accident.
Should you fail to tell your insurance company about an accident in a
timely manner, the insurance company may try to deny coverage for the
occurrence.
After you have notified your
insurance company of an accident, the policy may require you to "Tender
the Defense" of any claims arising out of the occurrence to the
insurance company. This means that you are required to allow the
insurance company to hire an attorney or otherwise participate in the
settlement and litigation of claims against you by third parties. This
also protects you, as the insurance company will provide a defense for
you in the event that you are sued as a result of your operation of a
vehicle.
Once an insurance company has
provided benefits to you, such as the repair of your vehicle under
collision damage coverage, you must give the Subrogation Rights arising
from the accident to the insurance company. This means that once your
insurance company has "made you whole" after a loss, you must give your
right to pursue negligent third parties for compensation to the insurance
company. This enables the insurance company to be "made whole" for its
payment to you by recovering damages from the negligent third party. In
other words, if your insurance company pays you for damages incurred in an
accident which was not your fault, you give them the right to sue the
party at fault, and you give up that right.
Some states, and many
insurance companies, have Mandatory Arbitration of disputes arising out of
auto accidents. In a mandatory arbitration state or insurance policy,
liability for damages must be determined as a result of an arbitration
process before a civil lawsuit can be filed in the court system. In
arbitration, neutral arbitrators (knowledgeable practicing attorneys) are
selected, and evidence is presented to them. The arbitrators then
determine the amount of the arbitration award. If the arbitration award is
agreed to by both parties, the matter is ended (the arbitration award may
be made a court judgment for further enforcement purposes). If either of
the parties involved refuses to accept the arbitration award, a lawsuit
may then be filed to have a new trial in a court of law, with liability to
be determined by a judge or jury.
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2. What are the minimum auto
insurance coverage required by Illinois laws?
Automobile insurance laws in Illinois require the owner of a vehicle to
have a certain amount of liability insurance on their vehicle. Liability
insurance provides compensation to another person in the event that you
cause an accident and are found to be liable to that person for damages.
The minimum amount of coverage required by law is $15,000 for property
damage, $20,000 for bodily harm to one individual and no less than
$40,000 bodily harm to two or more individuals. You can purchase amounts
of liability insurance greater than the minimum in order to protect your
personal assets against the risk of higher damages being awarded against
you in the event you cause more serious injuries.
Medical
Payments (Med-Pay) Coverage
When
purchasing automobile insurance for yourself, you may seek to include
several additional types of coverage other than liability insurance. One
of these types of coverage is called medical payments coverage which is
not required by Illinois law.
Medical
payments coverage is a form of health coverage called by various terms,
including" med-pay", "personal injury protection (PIP)," or on occasion,
"economic loss protection benefits." This coverage is available to the
insured driver (the individual who holds the policy which includes
med-pay coverage) and any passengers in the insured's vehicle for
injuries sustained, regardless of the fault of the driver. It is
important to note that the insurance policy of the negligent party does
not pay med-pay or PIP benefits to an injured plaintiff. These benefits
are limited to the driver or passengers in the insured vehicle,
regardless of fault. The plaintiff looks to his own insurance policy or
the policy of the vehicle in which he was a passenger for med-pay or PIP
benefits.
The amount of med-pay
benefits which may be paid to any individual is determined by reference
to the policy limit for this particular type of coverage, as stated in
the insurance policy declarations sheet for the person who purchased the
coverage.
Uninsured and Underinsured
Motorist Benefits:
Two other related types of
voluntary coverage you can (and should) purchase are uninsured and
underinsured motorist benefits. These types of coverage protect you
against a negligent defendant who illegally does not have liability
insurance coverage or has minimum coverage that is inadequate to fully
compensate you for your injuries. If you are involved in an accident
with an uninsured but negligent individual, we would make a claim for
you under your own uninsured motorist coverage. Your own insurance
carrier would then have to pay any judgment rendered, up to the limits
of the policy which you purchased.
An
additional claim can be made under your own policy for what is called
underinsured motorist benefits if your damages exceed the limits of the
other party's insurance liability coverage or their liability coverage
is less than your uninsured motorist coverage. A complicated body of
case law has evolved dealing with this type of benefit and the
experience of an attorney familiar with these issues is important in
order to obtain the maximum amount of recovery for you.
Collision Coverage
Collision
coverage is a type of voluntary coverage you can purchase which provides
for the repair or replacement of your own vehicle after an accident,
regardless of whether you are at fault. This is different than property
liability insurance coverage discussed above. An innocent victim of an
accident may present a claim for property damage under his or her own
collision coverage or under the negligent defendant's property damage
liability insurance coverage. Your own collision coverage normally
includes a deductible, whereas property damage liability insurance
coverage does not. In an automobile accident case, after a claim has
been paid under collision coverage, the insurance carrier who paid the
claim may proceed against the property damage liability insurance
carrier for the negligent defendant to recover the amount paid out. This
process is called subrogation and does not affect your recovery.
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3. Do I need uninsured
motorist coverage as part of my auto insurance policy?
Essentially, Uninsured /Underinsured Motorist Coverage ("UM Coverage")
provides compensation to you, (your family members and anyone occupying
your vehicle) if you are injured by a careless driver who has no
insurance, or not enough insurance to cover your loss. UM coverage
allows you to collect any additional compensation from your own
insurance company, up to the limits of your UM coverage. Unless you have
UM coverage, you may not be able to collect for your personal injuries,
medical bills, wage loss and other damages, if the other driver did not
have enough automobile liability insurance.
If you
already have automobile liability coverage, then you automatically have
UM coverage up to the limits of your liability limits, unless you sign a
document called an UM Waiver Form. The UM Waiver Form allows you to
waive UM coverage, or select UM coverage at limits lower than your
liability limits. We strongly suggest that you do not waive UM coverage
and purchase the highest limits available in order to protect you and
your family. We have seen families financially ruined when the "major
bread winner is injured by an uninsured or underinsured driver. DON'T
LET IT HAPPEN TO YOU!!!
Finally, do not rely on an
insurance agent's representation that you have "full coverage." Full
coverage does not necessarily mean you have UM coverage. We encourage
you to pull out your insurance policy and check to see that you have
adequate uninsured/underinsured motorist coverage. If you do not have UM
coverage, then contact your agent, pay the additional premium and
"protect yourself first!
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4. Do I need an umbrella
liability insurance policy?
Personal umbrella liability
insurance financially protects you against a catastrophic lawsuit or
judgment. It provides expanded liability coverage over and above your
primary liability protection. It increases the coverage afforded under
your homeowners/renters and auto insurance policies.
Do not
assume that your automobile and homeowners insurance coverage provide
you with enough liability protection. If you have significant assets you
need to consider additional insurance coverage. A serious personal
injury can leave you exposed to a financial exposure over and above your
ability to pay.
These policies are generally
sold to individuals that have significant assets to protect. Contrary to
popular belief, these policies are not just for the very wealthy.
Individuals with high or above average incomes may need this type of
protection as well. High income earners may face financial ruin if they
are faced with a significant personal injury judgment that exceeds their
limits of liability insurance.
Let us assume that you are at
fault in causing a very serious motor vehicle accident that kills or
significantly injures another driver. You have only $100,000 in automobile
liability insurance on your car. The injured party has injuries and
medical bills that exceed your 100,000 policy. Without an umbrella policy,
you may be responsible for paying for all the injured person's damages,
over and above the limits of your $100,000 liability policy. An umbrella
policy provides you with an additional layer of protection that would pay
over and above the limits of your underlying policy.
An excess
insurance policy will not only protect you if you are involved in an
automobile accident, but also protects you in the event you are held
liable for an accident that occurs at your home. As mentioned above, an
umbrella policy expands the coverage afforded under your auto liability
policy and your homeowner's liability policy.
Without
adequate insurance, even a high income earning could be forced into
bankruptcy by a judgment in excess of his available insurance coverage.
If your assets exceed $100,000 you may wish to consider an umbrella
policy.
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5. Will my insurance company
drop me if I make a claim?
Generally, if you are not at
fault in the accident and you make a claim against your medical payments
ocverage or you uninsured motorists coverage, your insurance company
will not usually drop your coverage. This is because the accident was
not your fault. If you are not at fault and another driver makes a claim
against your liability coverage, your insurance company may drop or
increase your coverage.
6. Does my insurance provide
coverage to persons that I lend my car to if they are not named on my
policy?
Yes. Most insurance
agreements contain what is known as the Omnibus clause. This means that
if you give someone else permission to use your car, and they are
involved in an accident, then the coverages you have also apply to them.
However,
the question of coverage usually depends on the issue of permission. If
you did not give permission, then there may not be coverage. Be careful
on this question because if you tell the adjuster that you did not giver
permission, they will deny coverage you may be personally liable for
damages caused when the vehicle was used.
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If you have been injured in
an auto accident and have questions about auto insurance call
800-437-2571
anytime for a free no obligation confidential consultation with one of
our lawyers experienced in handling auto accident claims or use our
convenient Free Case Evaluation submission
form.
Should
you decide to retain our services, we will work on a 100% contingent fee
basis. Simply stated, we get paid for our services only if we recover
monies on your behalf from the insurance company.
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