Full Coverage? What you should know about auto insurance

02/05/2012


Many of my clients who have been involved in an automobile collision enter my office and proudly proclaim “I have full coverage”.  By this they usually mean they have broad auto insurance coverage including uninsured motorist (UM), medical payments, lost wage benefits, collision, comprehensive, rental reimbursement and towing in addition to the legally required liability coverage.  Unfortunately, this is typically not the case. 

 Georgia law only requires liability coverage to operate a motor vehicle.  Liability coverage provides coverage in the event you are at fault in a motor vehicle collision and cause property damage or personal injuries to the other driver.  The logical presumption is that legally required coverage equals “full coverage”, when, in fact, it is only liability coverage. 

In Georgia the law requires a minimum of $25,000 liability coverage per vehicle for property damage and the same amount per person for personal injuries.   Under a minimum limit liability policy the maximum an insurer will pay for property damages from an accident is $25,000 per vehicle up to a maximum of $50,000, regardless of how many vehicles are involved.  This level of liability coverage is stated as “$25,000/$50,000” on your auto insurance declarations page.  Similarly, the maximum an insurer will pay for personal injuries under a minimum limit liability policy is $25,000 per person up to a maximum of $50,000, regardless of how many people are injured or how severe their injuries may be.
 
 If you have only the required liability coverage you may be in for a surprise the next time you are in a motor vehicle collision.  Let’s assume you are not at fault, you sustain substantial personal injuries and property damages and that the other driver also has only the minimum required $25,000 liability coverage.   Presuming your vehicle is a total loss and has a value in excess of $25,000 there will not be sufficient coverage to fully compensate you.  In the event there are towing and rental car expenses they will further diminish your recovery.  Additionally, if your personal injuries require significant treatment and result in disability, lost wages, pain and suffering and probable future care, you will likely not be fully compensated by the available $25,000 limit.  In the event the accident involved multiple vehicles your recovery will be further reduced.

 In the above situation the purchase of UM coverage would provide additional coverage from your own insurance company beyond the limits available under the other driver’s policy.  Keep in mind that the amount of UM coverage must be in excess of the other driver’s policy so consider purchasing at least $50,000 limits.  It is estimated that one third of the vehicles on Georgia highways are uninsured so if you refuse UM coverage you are playing “Russian Roulette”.  Medical payments coverage and lost wage benefits are available to pay your out of pocket expenses regardless of who is at fault.  The beauty of these coverages is that when you recover from the other driver’s insurance company these expenses will already be paid.  Often these optional coverages are not fully explained and are very inexpensive.

 Take some time to look at your automobile policy and see if you truly have “full coverage”.  Talk to your agent or adviser as there are a variety of other scenarios where optional coverages can make sense.