I Have Full Coverage! I’m All Set, Right? Well … Not So Much

by John Mesirow

I Have Full Coverage! I’m All Set, Right? Well … Not So Much

Having been a personal injury for 19 years, I can’t tell you how many times I have explained various insurance coverages to clients and heard in reply: “I had no idea!” or “My agent never told me anything about that!” With the hope that you will never have to say anything like this (because you’ll be in the know), I’m going to share something that is obvious to anyone dealing with insurance every day, but would almost never occur to the general public. Today’s post is about “full coverage.”

When I first meet with a client , of course we always discuss the client’s insurance coverage (even if the other party is at fault. More on that in a later post.). The client routinely declares, usually with great pride, “I have full coverage.” While this is better than having liability only (meaning the coverage only applies to accidents you cause – it doesn’t cover damage to your vehicle), the truly important factor is the dollar limit of your policy. You can have full coverage, but have the state minimum limits ($25k in Washington, DC, $30k in Maryland, and $25k in Virginia if you choose to have it! You can pay the DMV a $500 “uninsured motor vehicle fee” and drive around with no insurance! Brilliant!)

The dollar limits of your “full coverage” are extremely important. Why? If you have the minimum limits and you cause an accident resulting in serious injuries to another, any assets you have could be at risk. (This could be avoided with slightly higher premiums. Unless your driving record is really ugly, higher limits are surprisingly affordable.) Additionally, and most relevant to a personal injury lawyer, if someone with minimal policy limits injures you, you will only be able to recover what you are entitled to if YOUR limits are higher than the at-fault driver’s limits.

How does this work in practice? …

You get violently rear-ended by a DC driver with the minimum limits ($25k). You suffer fairly serious injuries, incurring $45k in medical bills and $10k in lost wages. The most you will be able to recover from the other driver is $25k. You also live in DC. If you have the minimum limits of $25k, that’s it. Your insurance won’t provide any additional benefits to you. However, let’s say your limits are a $100k (still too low, but better than the minimum limits). You now have an additional $75k in coverage to compensate you for your injuries and lost wages under your “underinsured motorist coverage!” (Even though you have $100k, your insurance company gets a credit for the $25k the at-fault driver’s insurance company will pay you.) Additionally, since the accident was not your fault, the use of your underinsured motorist coverage won’t get “scored” against you, meaning it won’t cause your rates to go up.

So, while your coverage may be “full,” it is shallow. You want your coverage to be deep. Like most things in life, the only way you can be sure you are protected is to protect yourself. We’ve handled fatalities where both drivers only had the minimum limits. The immeasurable loss of a loved one is often compounded by the loss of the ability to pay for food and shelter for the surviving family. (We’ve seen this happen several times when the breadwinner is the victim.)

Now you’re in the know. Please, take a look at your declarations sheet (which lays out your coverages) and then talk to your agent (if you are lucky enough to have a good one) or your insurance company (if you have a company that no longer uses agents) and review your coverages. You would be surprised at the number of clients who, years ago, took my advice and increased their policy limits, and in later years had another accident in which they greatly benefited from the better policies they purchased. Drive (and ride – I’m a cyclist) safely, but be prepared for all those bad drivers out there!