Auto Accidents: Chapter 1

Drive Defensively … Get the Right Insurance

When you get into your car, shut your door, click your seatbelt into place and put it in gear, you’re probably thinking about getting to your next stop. You’re not thinking about getting in an accident. But accidents do happen. Even if you’re the most cautious, aware driver on the road, not everybody is like you. You simply must protect yourself from the financial impact that can ensue after an accident. When you protect yourself financially, you are also protecting your health and everything that good health allows you to do.

This chapter covers the following:

• Types of insurance you should get
• Driver safety

Types of Insurance You Should Get

When it comes to insurance, you want to purchase as much as you can afford. Why? Because some accident injuries cost a lot. Even responsible drivers who are victims of someone else’s reckless behavior can end up with more bills than insurance companies will pay. There are ways to protect yourself.

Liability Insurance

Liability insurance covers you in the event that you hit someone else with your car. It will help pay for the other person’s injuries, their car or motorcycle damage and property loss. In the State of Colorado, this coverage is mandatory and you must have a minimum of $25,000. But you should get as much as you can afford, ideally at least $100,000. If you don’t have enough insurance to cover the damage that you cause in an accident, the victim may be able to come after your home, your personal business, or any other asset that holds value.

Collision Insurance

Collision insurance is your gift to yourself. It protects you in the event that you’re in an accident – no matter who is at fault – and the at-fault driver doesn’t have auto insurance to fix your car, or when it may take months for the other driver’s insurance to pay you. Collision insurance gets you money quickly to fix or replace your car at fair market value.

Here at the O’Sullivan Law Firm, we often see clients who have dropped this insurance because they think their car is old and not worth much. But, if they’ve been hit by someone with no insurance, suddenly that $5,000 “clunker” is priceless! They need to get to and from work and they don’t have $5,000 to replace it themselves. Collision insurance can get you over this hump. Also, if the other driver’s insurance does owe you the money to replace or repair your car, they often drag the process out for months. In the meantime, you need a car. Again, that is exactly why you need collision insurance.

Rental Insurance

You should buy a minimum of two weeks to 30 days of rental insurance. Whether an accident is your fault or somebody else’s, you don’t want to be left without a car while the insurance companies figure out what your car is worth and who is going to pay you. Renting a car is expensive! Rental insurance generally isn’t.

Underinsured Motorist Coverage

Consider this true story from the O’Sullivan Law files: Jake was driving north along a rural road in Colorado. He was going the legal speed limit. A driver pulled out from a perpendicular road and Jake hit that vehicle. Jake’s left leg, knee and hip were shattered.

The other driver, who was in a large truck, was at fault.

Jake faced multiple surgeries and significant recovery time away from work. Additionally, he had a very physical job – working for an oil rig company – so he needed to heal much longer before returning to work than would a person who might be returning to a desk job. In a typical work day, Jake would visit job sites, climb rigs, and inspect oil drilling operations. His hip and leg had to work properly.

The person who caused the accident only had $50,000 in coverage, which was nowhere near the amount that Jake would need for his procedures and to cover lost work. Luckily, Jake carried an additional $100,000 of UIM (Uninsured/ Underinsured Motorist Insurance) coverage on his own auto policy. The O’Sullivan Law Firm was able to secure the $50,000 from the at-fault driver, as well as the $100,000 from Jake’s policy.

At a minimum, you should purchase $100,000 of UIM insurance coverage. If you can afford more, you should have it.

Why do insurance agents often steer drivers away from this coverage?

Insurance companies and agents are pressured to keep premiums as low as possible. Also, many people function under a popular misconception: They think that, if you have health insurance, you don’t need UIM. But that’s not true. First, think of your health insurance deductibles and co-pays. In some severe cases, those expenses alone are enough to stress a person’s finances.

Second, health insurance doesn’t cover everything that UIM covers. Uninsured/Underinsured Motorist Insurance covers:

• Lost wages
• Future medical expenses
• Any damage arising from the accident (with the exception of property damage)
• All economic and noneconomic loss, which includes pain and suffering

Health insurance and UIM insurance are completely different.

Umbrella Coverage

You simply must protect yourself from the worst-case scenario. What if you have a moment of negligence and really hurt somebody? When your insurance coverage runs out, the victim can go after your home, a personal business, or any other asset that holds value. Umbrella coverage is named well because it sits over all of your other insurance like an umbrella and it kicks in when damages exceed $250,000. In order to get Umbrella coverage, you must first possess a minimum of $250,000 in other coverage. That way, the Umbrella will cover you from $250,000 up to a $1 million.

A good rule of thumb for insurance is to purchase as much as you can.

Driver Safety

The best way to protect yourself in an accident is to be a smart driver in the first place…

Always wear your seatbelt. Always.

Turn your cell phone off while driving. If you must drive and talk, use a headset. Do not hold the phone. Courts have determined that reaction time while talking on a cell phone is as slow as if you had been drinking. Some courts are now allowing punitive damages if the other party can prove that you were on the phone while driving. When you talk on the phone, you could hurt yourself, the people in your car, or others on the road… and you could be opening yourself up to a judgment in the amount of triple the damages of a normal accident!