Insurance – do you know what you have? Part I

I started in the insurance industry over 14 years ago and one thing that never changes, is that when I talk to people about their insurance, it all comes down to one thing – price.

Now I know especially in this economy, that we are all pinching our pennies and cutting out unnecessary cost. But before you strip your auto and home insurance policies, Please read on…

Last year I spoke to an 78 year old gentleman on the phone who called for an auto insurance quote. I got his information put the quote together, and before I told him a price I asked him, “Do you know what each of these terms mean, if not, I’d like to take just a minute to explain them to you.” After I went thru his policy, he stopped me and thanked me for taking the time to explain his coverages and answering all his questions. He stated “In all my years of buying insurance, I have never had anyone tell me what they meant – thank you for taking the time to educate me.”

Now each state has different rules and regulations through the State Insurance Department – but overall, the explanation of coverages are the same. I wanted to share some of my knowledge.

What is Bodily Injury Liability Coverage?

Here’s how this works. If you cause an accident and somebody else gets hurt, you might have to pay their medical bills. Or, get this, reimburse them for their lost wages. And hey, paying someone else’s bills or salary could put a serious strain on your budget. That’s why you have Bodily Injury Liability coverage. It helps protect your money.

Alot of times your auto policy will have two separate bodily injury liability limits – the first limit is per person – for example the state of Ohio requires drivers to carry a minimum liability of $12,500 per person.  {Which if you ask me is not nearly high enough – think about it. You are running late to work, and you aren’t paying as close of attention to the road as you should. The driver in front of you slams on his breaks – and you slam into him. He gets out of the car complaining about a stiff neck, that he drives for a living and he won’t be able to drive for a few weeks. Your looking at some major $$$ – ER visit, loss of wages, pain and suffering – it all adds up to big bucks a little over $12k isn’t going to get you far}.
Moving on – the second number under your ‘bodily injury liability’ is “per accident”. So you have a total of $12,500 that your policy will pay out to one single person, and again with the state of Ohio, they require your per accident amount to be a mere $25,000. {Hit a van full of kids on their way home from the football game?? You know that ER visits for 5 people is easily going to eat up your max amounts of coverage}.

What is Property Protection Coverage?

Property Protection. Okay, this one’s easy. This kind of protection usually covers when you bang into somebody else’s property. Say, if you hit a parked car or drive through a fence.It really comes in handy when you’ve got to pay for something that’s not yours.

This is usually the 3rd number that you’ll see in your liability section of your auto insurance policy. Again, with the state of Ohio, they only require that you carry $7,500 for property damages. .. I don’t know about you, but I’d say at least 50% of the cars on the road today are wayyy over $7,500 in value.

What happens if I don’t have enough coverage?

This is the part that scares me – I have NEVER EVER in my 14 yrs of selling and servicing insurance policies had someone ask me “What if I don’t have enough?” I will give credit to those who have been through a claim where their policy didn’t cover enough, or they have already taken all the steps to secure their financial future – and already have higher liability limits, but the problem is, most don’t.

Here is the nitty gritty of it – Once your insurance company pays out the max your policy limits cover , that’s it. They wash their hands of you. There is no “oh, well you’ve been a loyal customer”, or “I just really like you, so let me take care of it”. Insurance companies are no longer liable once your policy exceeds the limits that you purchased in your insurance contract. Yup. That means you hit that $40,000 Lexus and total it – your left with the $32,500 bill.

Please, PLEASE make sure that you call your agent and do a review of your policies. Not everyone requires a million dollars in liability coverage – but think about it like this  -you are protecting your financial future, just by paying out those extra few bucks a month now- Courts will garnish wages, freeze checking and savings accounts, heck you can’t even sell your home because they can but a lien against it.

Part II of our Insurance – do you know what you have? will continue later this week.

In the mean time, if you are in Ohio, Kentucky or Indiana, please feel free to call or email me. I will be more then happy to review your current coverages, or even give you a quote.