Auto Accidents: Insurance To Protect You And Your Loved Ones

According to insurance industry estimates, the average motorist files three to four insurance claims for automobile accidents in their lifetime. This is not surprising, given the amount of time we spend in or near automobiles each day - going to work, walking your pet, buying groceries, taking your kids to a soccer game, or going to church. While most automobile accidents are relatively minor, automobile accidents resulting in serious injury or death can place substantial physical, psychological, and financial burdens upon those injured and/or their family members. Our goal at Atwood, Holsten, Brown, Deaver & Spier, is to assist our clients in obtaining full compensation for their injuries. Unfortunately if you do not have proper insurance coverage, obtaining full recovery in the unfortunate event that you or your loved ones are seriously injured in an automobile accident may be legally impossible. More troublesome, time and time again, we have seen folks without adequate coverage watch their savings, 401 (k), and yes, even their housing and standard of living significantly altered or wiped out. Thus, to ensure that you and your loved ones are protected from financial ruin, it is very important that you obtain as much automobile insurance coverage as you can afford.

Buy Uninsured/Underinsured Motorist Coverage

Nebraska law requires that all motorists carry automobile liability insurance. Unfortunately, not everyone follows the law. A study released in April 2011 by the Insurance Research Council estimated that one in seven drivers is uninsured. If you are the unfortunate victim of an uninsured motorist, you will recover NOTHING from the uninsured motorist unless she or he has viable personal assets you can collect. Not coincidentally, most motorists who neglect to carry automobile liability insurance have no viable personal assets.

Consider this hypothetical: As a result of an automobile collision caused by a drunk driver, you sustain significant injuries which threaten render you seriously impaired for life. Your medical costs, lifetime home-care costs, and past and future lost wages are estimated at over one million dollars ($1,000,000). (Note that under Nebraska law an injured party is entitled to be made whole for the harms and losses attributable to the negligent motorist, including claims for: past and future medical and pharmaceutical bills, lost wages, past and future physical impairment and disability, loss of future earnings and earning power, mental distress, loss of enjoyment of life, pain and suffering, and inconvenience.) As noted above, if the drunk driver failed to carry automobile liability insurance and had no viable personal assets, you will recover NOTHING from the negligent uninsured drunk driver.

Even if the drunk driver has automobile liability insurance, Nebraska requires relatively low minimum liability policy limits of $25,000 per person and $50,000 per accident ($25,000/$50,000). These days, it is not uncommon for a seriously injured individual to incur $25,000 in hospital bills in just a few days. Moreover, a back or neck surgery often costs over six figures. As the above hypothetical demonstrates, relying on other motorists to maintain adequate liability insurance in case of your serious injury is extremely risky. To ensure that you are not one of the unfortunate individuals who are forced to sustain devastating personal financial loss in the case of serious injury or death, you must ensure that you maximize your underinsured and uninsured motorist coverage and obtain proper umbrella insurance.

Maximize Your Uninsured And Underinsured Policy Limits

Uninsured motorist (UM) coverage protects you if a negligent driver has no automobile liability insurance. Underinsured Motorist (UIM) coverage protects you if a negligent driver has liability coverage, but your harms and losses exceed the negligent person's liability coverage. Favorably, Nebraska requires that every automobile policy covering a vehicle "principally garaged in Nebraska" contain UIM and UM minimum policy limits of $25,000 per person and $50,000 per accident.

While UM and UIM insurance coverage certainly provide additional protection, in the case of serious injury, the minimum UIM/UM coverage provided by Nebraska law will likely not come close to fully compensating you in the case of serious injury. To demonstrate, suppose the drunk driver in the above hypothetical had a minimum automobile liability insurance coverage policy limit of $25,000 and you likewise had an UIM policy limit of $25,000. Assuming that your actions did not contribute to the cause of the automobile collision, you would obtain policy limits of $25,000 from the drunk driver's liability insurance carrier and $25,000 policy limits from your UIM policy, for a total recovery of $50,000. That recovery will be reduced because your health insurance carrier will likely want back a significant portion of any medical bills it paid on your behalf, and you will have to pay any legal fees or costs. Although you would recover at least something from the negligent driver, you would sustain significant losses in unrecovered legal damages. Most of us do not have the means to sustain such an enormous financial burden.

To prevent this result, we recommend that you contact your adjuster and obtain as much coverage as you can afford for both your UIM and UM policies. These policies often provide coverage of $100,000 per person and $300,000 per accident ($100,000/$300,000), or sometimes as much as $250,000/$500,000. Unfortunately, considering rising medical costs, these minimal amounts do not even begin to cover the cost of many surgical procedures, depending on the nature and severity of your injuries. And what about your lost wages?

Buy An "Umbrella Policy" Containing UM/UIM Coverage

"Umbrella" insurance, sometimes referred to as "excess" insurance, is a separate insurance policy that combines with each of your primary insurance policies, including automobile insurance and homeowner insurance, to provide you with an additional layer of protection. Most available umbrella insurance policies apply only to situations in which YOU are held liable to another party, and do NOT apply if you are the victim of another's negligence. Therefore, you must insist upon and obtain umbrella coverage that contains UM and UIM coverage, which will apply regardless of who is negligent.

To demonstrate how umbrella insurance coverage with UM and UIM coverage will protect you and your family, consider our original hypothetical. If the negligent driver maintained minimum liability coverage of $25,000 and you maintained maximum limits on your UM/ UIM coverage of $100,000, you would be responsible for $1,875,000 of your compensable monetary damages. If you had an umbrella insurance policy with UM and UIM coverage, once you obtained the maximum limit from the drunk driver's insurance carrier and your primary UIM/UM insurance policy, you would be able to recover under your umbrella policy. Supposing you maintained a $2 million dollar umbrella, you would be fully compensated.

Most umbrella insurance policies do not contain UM and UIM coverage. If you have already purchased an umbrella insurance policy, you must read your policy and determine if it contains UM and UIM coverage. Like many of us, upon reading your insurance policy, you will likely find that the language used in your insurance policy is confusing. If you have difficulty determining whether your umbrella coverage includes UM and UIM coverage, or what exceptions may apply to your umbrella insurance policy, call your insurance agent and get the agent's answers in writing. If your umbrella insurance policy does not contain UM and UIM coverage and your insurance company does not offer umbrella insurance which contains UM and UIM coverage (many do not), do not hesitate to find an insurance company that does. Thankfully, umbrella coverage is relatively inexpensive and based on our experience, ranges from $150 to $300 per year for approximately $1 million per claim and $3 million per accident in additional coverage ($1,000,000/ $3,000,000). Some insurance companies offer umbrella policies in excess of $5 million. There are other benefits to umbrella coverage outside the scope of this article. Please contact your insurance agent for an explanation of these benefits and information pertaining to your specific policies.

To summarize, we strongly recommend you (1) check with your insurance agent to ensure you have the maximum amount of UIM/UM coverage that you can afford and (2) if you have already obtained an umbrella policy, ensure that your umbrella policy provides UIM/UM coverage irrespective of who is negligent and/or request an additional umbrella policy that provides UIM/UM coverage. Following these steps will best protect you and your family for that day that hopefully never comes.

This article is intended to aid the general consumer only. The information contained in this article is general legal information and is not intended as legal advice for any particular case. You should contact an attorney to obtain advice with respect to any particular issue, problem, or potential legal claim. Atwood, Holsten, Brown, Deaver & Spier does not sell insurance and every insurance policy is different. Thus, you should not rely upon information contained in this article in any manner, and you should consult with your insurance agent concerning your particular insurance policy's provisions. The opinions expressed in this article are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.