- What should I know about auto insurance
- What are the minimum auto insurance coverage required by Illinois laws?
- Do I need uninsured motorist coverage as part of my auto insurance policy?
- Do I need an umbrella liability insurance policy?
- Will my insurance company drop me if I make a claim?
- 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.
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 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.
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!
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.
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.
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.
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.