Full Coverage or Fool’s Coverage?

Do you think you have “full coverage” on your auto or motorcycle insurance?

Here’s a fact: most people have no idea what full coverage means and, worse, they don’t have what they need.

Not Really Full Coverage

We recently had a client call us after he was the victim in a motorcycle accident. A truck driver made a U-turn in front of him and pinched his leg between the bike and the truck, nearly severing his leg. This poor guy underwent major surgeries and couldn’t put weight on his leg for 6 months. He’s an electrician! He couldn’t work through the whole ordeal. He came to us for help and he said, “My brother-in-law is our insurance agent. I have full coverage.”

He was convinced that this accident wouldn’t cost him a thing. Sadly, he was very wrong.

We took a look at his insurance and discovered that he only had liability coverage! Liability coverage only protects you if you CAUSED the accident. He had $250,000 in liability coverage, which is great, but it is hardly “full coverage.”

Liability coverage protects you if you hurt someone else or damage their property, such as their car. With that coverage, the victim of your accident can’t go after your home or other assets. But liability coverage does NOT help if you are the victim of someone else’s negligence. For that, you have to either: a) hope and pray that the other guy has awesome liability coverage (way more than the minimum of $25,000 that most people have), or b) protect yourself with UIM coverage.

My colleague, Eli Ohlhausen, likes to say, “Liability coverage protects your assets. UIM protects your a**.” And he’s right.

The client above, whose leg was nearly severed, didn’t have any UIM coverage at all. And, predictably, the other driver only had $25,000 in liability coverage. So, our client could only get $25,000 from the other driver’s insurance. After medical bills… well, he had nothing… and he might even lose his house because of his inability to pay the mortgage. (Remember, he couldn’t work.)

This accident – that he didn’t cause – has completely ruined his life.

So, what do I recommend for “full coverage?”

• Liability coverage: This depends on how much you own. If you own a house and have a lot in savings, buy high. If you don’t, buy low.
• UIM: Get as much as you possibly can! At a minimum, you should have $250,000 in UIM and if you are a motorcycle rider, I strongly recommend you buy much more because you are so vulnerable on that bike. Your medical bills after an accident could easily exceed $300,000. We see it all the time.
• Medical Payments Coverage: I will talk about this in an upcoming blog.

A Story with a Happier Ending

We had another client who was driving home from work. A kid in a pickup coming the opposite direction crossed the double-yellow line and hit him head-on. The victim sustained significant brain injuries and could no longer work. (He was an engineer with a family.)

The kid had $50,000 in liability coverage and our client had $250,000 in UIM, so he was able to get $300,000.

If you think you have “full coverage” but you’re not even sure what that means, please call your agent and say, “Do I have UIM?” If he or she says, “No,” then you need to say, “Add it today!” (I will write a separate blog about why agents might discourage you from getting UIM or Medical Payments Coverage. Please, don’t let them sway you!)

Call me any time if you’re confused about your coverage. It’s a confusing topic! 303-388-5304.