How Much Auto Insurance Do I Really Need?

We’ve all talked to folks about auto insurance who say “I’ve got full coverage.” But what does that mean? When was the last time you reviewed your policy to make certain your coverage limits were adequate? Statistics vary with respect to the percentage of un-insured and under-insured drivers on our roadways. But the reality is that many drivers are un-insured or grossly under-insured. As you will see in the scenarios outlined below, it is critical for your personal protection and the protection of your family that you carry adequate automobile insurance coverage. Failure to maintain adequate car insurance limits can create a devastating financial burden and impair your credit for years to come.

I want to share two “real life” scenarios VanMeveren Law Group, P.C. recently experienced in the handling of two very serious injury claims. In the first case, we represented an elderly couple that was hit head-on while driving in winter conditions on a highway in northern Colorado. The injuries were severe and life threatening. All parties involved in the collision were “life flighted” from the scene to nearby hospitals. The young driver who caused the collision was operating a vehicle owned by his parents. The responsible driver’s vehicle had insurance coverage that included liability limits of $100,000.00 per person and $300,000.00 per accident (the state minimum insurance limits in Colorado are $25,000.00 per person for bodily injury and $50,000.00 per accident). You may think $100,000.00 in coverage is a lot of coverage, but as you will see below, it was grossly inadequate in this instance.

Once our investigation proved that the young driver was the sole cause of the collision, the insurance carrier offered our clients the policy limits of $100,000.00. Tragically, the elderly couple had severe and permanent injuries, along with medical expenses well in excess of $500,000.00. This left our clients with no option but to pursue full damages from the responsible driver and his parents. Because the driver’s parents carried inadequate liability coverage, these claims had a devastating financial impact on this young man and his parents.

The lack of adequate liability insurance forced the responsible party’s family to make a substantial personal contribution to the settlement. Despite the personal contribution from the responsible driver’s family, the elderly couple was still grossly undercompensated.

Fortunately, our clients recently purchased a single limit under-insured policy with coverage limits of $1,000,000.00. After extensive negotiations with the insurance carriers and the at-fault driver’s attorneys, we were able to settle all claims, successfully negotiate compromises with our clients’ medical providers and pay all outstanding medical expenses and costs associated with this tragic event. Because our clients carried sufficient under-insured motorist coverage, they were able to cover all of their expenses and net a substantial recovery for ongoing care needs and future medical bills.

Scenario two does not have the same favorable outcome. In the second case, our client was broad-sided by an inattentive driver who ran a red light. The injuries to our client were severe and debilitating, necessitating a complex spinal surgery. Our client’s medical expenses exceeded $100,000.00. The responsible driver carried a liability policy of $30,000.00, was unemployed and had no assets to satisfy our client’s substantial damages, which greatly exceeded the available liability limits. To make matters worse, our client was completely uninsured, carrying no liability, un-insured or under-insured motorist coverage.

Even after we obtained favorable compromises on the outstanding medical expenses, our client was still exposed to multiple collection notices and claims, as well as numerous judgments for unpaid medical bills. The combination of the responsible driver carrying inadequate insurance and our client’s decision to go “bare” with no insurance left him in financial ruin.

Two simple lessons from these “real life” scenarios. Lesson #1, carry adequate liability insurance and an umbrella policy to protect yourself from personal exposure to claims caused by your negligence and the negligence of those you permit to operate your vehicle. As noted above, $100,000.00 may seem like a lot of coverage, but when you are involved in a serious collision, causing life-threatening injuries, $100,000.00 does not go far.

Lesson #2, carry an adequate amount of un-insured/under-insured coverage and, if offered by your insurance company, seriously consider obtaining an un-insured/under-insured umbrella policy. Insurance providers in Colorado are required to offer un-insured/under-insured motorist coverage in an amount that is at least equal to your liability coverage. Depending on the date of the collision, you may be able to “stack” this coverage on top of any available liability coverage.The cost of “optional” un-insured/under-insured coverage is nominal when one considers the protection it provides for you and your family members. Not only will un-insured and under-insured coverage help cover medical expenses, it can also be used for lost earnings and pain and suffering claims. Depending on the policy provisions, you may also be able to use your un-insured/under-insured coverage if you are injured by a negligent motorist while you are a pedestrian or riding a bicycle.

For more information on the applicability of un-insured/under-insured motorist coverage, the statute of limitations and the legal requirements associated with the pursuit of un-insured/under-insured claims, please contact our team of experienced attorneys at VanMeveren Law Group, P.C.