Buying car insurance is not the simple task it used to be.For the last few decades, insurance companies and the state legislators who regulate them have created a confusing smorgasbord of coverages. With auto lenders requiring certain types of coverage, and the state requiring others, most of us avoid trying to decipher our policies and instead rely on our insurance agent to sell us what we need at a price we can afford. Unfortunately, many insurance agents don’t fully understand the intricacies of insurance law and often unwittingly recommend insufficient coverage. This is usually discovered when an insured driver becomes an injured accident victim and finds out his coverage doesn’t afford full compensation. With minor policy changes at minimal expense, this can be avoided.
The insurance industry estimates that between 15% and 20% of all drivers on the road are uninsured, meaning that about one out of every six drivers has no insurance at all.
With Virginia state mandated minimum coverage set at $25,000 per person and $50,000 per accident (25/50), there are considerably more drivers who have less than adequate coverage. Whether uninsured or underinsured, it has become commonplace for the negligent driver not to have adequate insurance for the payment of a full recovery to the innocent accident victim. In such circumstances, there are two scenarios: the accident victim gets short changed, or the accident victim has uninsured/underinsured (UM/UIM) coverage sufficient to pay full compensation.
The following case illustrates the point. Bill Jones (name changed), a successful businessman and father of three young children, was traveling to the midwest to visit his wife’s family for Christmas. On the way, he pulled over to adjust the baby seat of his infant daughter. While doing so, he was struck by an inattentive teenage driver who drove into Bill’s parked car. Bill suffered severe debilitating injuries, including a broken neck for which he was hospitalized for nearly a week. Bill was out of work for over a month and incurred over $100,000 in medical bills. The young man who hit him had automobile liability insurance coverage in the total amount of $15,000 per person. Were it not for Bill’s UM/UIM coverage under his own policy, his total recovery would have been limited to the $15,000 available from the defendant’s insurance coverage.
Bill was fortunate when he bought his insurance coverage in Virginia. His agent told him an accident story similar to the one he later experienced and convinced Bill to buy UM/UIM coverage. As a result, when the accident occurred, he was covered by a $500,000 single limit policy. Unlike a split limit policy, Bill’s policy paid the same amount per person as it did per accident. Thus, his own company paid him $435,000, the difference between the agreed settlement of $450,000 and the defendant’s $15,000 coverage.
Unfortunately, Bill’s story is the exception rather than the rule. Cases of inadequate coverage far outnumber those where there is enough available coverage to adequately compensate innocent accident victims. We believe that the cause is more from consumer lack of knowledge than it is a matter of cost. Converting $100,000 per person, $300,000 per accident coverage (100/300) to $300,000 per person and per accident (300/300), tripling per person protection, typically costs under $50 per vehicle per year.
A few statistics underscore the wisdom of the coverage we recommend;
- In 2012, there were approximately 120,000 auto accidents in Virginia; 110,000 involved single occupant vehicles.
- Loudoun County reports about 11 accidents per day.
- Fairfax County reports about 45 per day.
- Chesterfield County reports about 14 per day.
- Prince George County reports an average of 1.5 accidents per day.
The insurance industry tells us that the average driver in America will experience 5 accidents over a lifetime of driving; it’s little wonder that we are constantly barraged with auto insurance advertisements on TV and in other media. Given the realities of the road, we recommend single limit and UM/UIM coverage in the highest limits you can afford.