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The Biggest Lie in the Car Insurance Industry

September 27, 2023
Auto Insurance Car accidents insurance companies

The Biggest Lie in the Car Insurance Industry

Do you have enough car insurance to take care of yourself if you get in a crash with someone who has little to no insurance? That is the question at the heart of this article. Because a huge percentage of drivers on Colorado’s roads do not have enough insurance to pay for the mistakes they make. And if you’ve been told by your car insurance company that you have “full coverage,” then you’d better read this entire article before you drive again.

Because the biggest lie in the car insurance industry is the myth of “full coverage.”

If your insurance agent wrote you a policy and said, “There. Now you have full coverage,” you likely only have the bare minimum required by Colorado, which is $25,000. If you get into a catastrophic crash on Colorado’s roads, that probably won’t even cover your first day in the hospital.

And if you think the other guy’s insurance will cover your needs simply because “he caused it,” think again. He likely only has $25,000, too. Which means… you won’t have enough to cover your medical bills, lost wages, and more.

Uninsured motorist coverage can help cover expenses even if the accident was someone else's fault

The Cold Hard Facts

Just because someone else causes a car accident in Colorado does not mean they will have the insurance coverage to pay for all of the victims’ needs. And if you are injured in a Colorado car crash, your bills are going to pile up quickly. Who will pay those bills?

The truth is, YOU need to be prepared to cover your own costs by purchasing the right insurance.

Is that fair? If the other guy caused the accident and you have to use your own insurance to pay for your medical bills, is it fair? No, but this is no longer a question of right and wrong. It’s a question of protecting yourself and your family. Remember what I said at the top of this article: Most Colorado drivers are carrying the bare minimum required by Colorado, or $25,000. And they have likely been told by their insurance agents that they have “full coverage.”

So, if one of those drivers hits you, the max you can get from them is $25,000. That likely won’t even cover your first day of hospital bills.

That is why you must protect yourself. At a bare minimum, your policy should:

  • Provide enough liability coverage to pay someone else for their property damage, medical care and other costs that you may cause.
  • Provide you with enough coverage to pay for your own property damage (collision insurance), medical care (medical payments coverage) and other costs (UIM – see below) if you are in an accident.
    • 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: MedPay coverage kicks in no matter who is at fault – you or the other driver. You can access this money to help pay your medical bills.
  • Provide coverage for all members of your household, including students away at school or other adults who live with you.

Does your current policy adequately address all of these areas? If you’re not sure, call me for a free policy review.

What is Underinsured Motorist Coverage (UIM)?

Let’s go back to that scenario where someone else causes a crash but they only have $25,000 in coverage. If you end up hospitalized, your car totaled, missing work for days or weeks, then your expenses are going to skyrocket quickly.

Where will you get that money? YOU will provide it through the Underinsured Motorist Coverage (UIM) that you purchase from your insurance company. It’s right there in the name: “Underinsured Motorists” are those people driving around with $25,000.

So, one of those drivers hits you… you can use your own policy to cover all your needs.

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

“My Health Insurance Will Cover My Medical Bills” –  A Common Misconception

Having great health insurance doesn't mean you don't need Uninsured/Underinsured motorist coverageA good friend of mine recently called her agent to add UIM and he told her she didn’t need it. He said, “Do you have good health insurance? Well, then you don’t need UIM!”

So, now, let me explain why you need Underinsured Motorist Coverage even if you have great health insurance.

If you are like most people, you probably have a health insurance plan with an annual deductible and co-pays. Imagine that you’re in a catastrophic accident (or even a fender bender with moderate injuries): you will have to pay your deductible and all of those co-pays. Now, what if you can’t work? And what if the other person was driving uninsured or underinsured, providing very little (or nothing) to help you cover those expenses?

Your Underinsured Motorist Coverage can cover your medical deductibles, lost wages, unpaid medical bills, co-pays, and help compensate you for your pain and suffering, plus more.

If you DON’T have UIM, and the other driver only has $25,000 (the minimum required by the law), you will only get $25,000, which won’t even come close to covering your medical and other expenses.

If You Won’t Do It for Yourself, Do It for Your Family

Still not convinced that this “full coverage” myth is the biggest lie in the insurance industry? OK, listen to a cautionary tale based on tragedies I see all the time…

A driver, let’s call him “our friend Fred,” is heading south on I-25 in bumper-to-bumper traffic when out of nowhere, a car comes screaming down the left-hand shoulder and plows into Fred, pushing his car into an oncoming semi-truck that is also headed south. (This literally happened right in front of me last month.)

Fred is clearly the victim. He has multiple fractures, brain damage, his car will have to be towed off I-25 and totaled, and he’s got a family at home depending on his income. But the jerk who caused the accident only has $25,000 of coverage.

If Fred has $250,000 or $500,000 in UIM coverage, his insurance will very quickly kick in to cover his costs. If he doesn’t, his family may have to sell their home and any other assets to take care of him.

In the big picture, it doesn’t cost a whole lot more to get the right amount of insurance coverage. I am happy to chat with you any time to discuss your current policy and what I recommend that you add to it. Then you will have a “shopping list” to take to your agent.

How Can I Be Sure I Have Enough Car Insurance?

Everybody is different and everyone needs a slightly different insurance policy. If you own your home, you need more. If you rent, you might be able to get away with less.

Better yet, just give me a call. I would happily review your insurance and make recommendations. I don’t sell insurance, but I help Colorado drivers make sure they have good policies all the time. After we talk, you can go to your insurance agent knowing exactly what you should demand as part of your car insurance policy.

Call or text me for a quick conversation. 303-388-5304

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