When I have my first meeting with a new personal injury client, one of the first things I do is ask about their insurance coverage and the insurance coverage of the at-fault driver.
There is No Such Thing as Full Coverage
Very often, the clients will say, “don't worry I have full coverage.” Here's the problem with this answer. There is no such thing as “full coverage.” That is a phrase generally used to describe an insurance policy that is higher than the minimum coverage provided by law, but it has no precise meaning.
Getting Adequate Insurance
A better question for clients to ask (before they are in an accident) is “do I have adequate insurance coverage?” Here are the components of a motor vehicle insurance policy.
Liability. This part of the policy will pay for the injury and/or damage you cause if an accident is your fault. The minimum coverage required under Idaho law and Washington law at the time of this writing (July, 2020) is $25,000. This is a woefully inadequate amount of insurance. Remember, if you inflict damage in excess of your policy limits, your own assets can be seized by the person injured in the accident.
Hospital costs and doctor bills have been rising steadily for decades. Just about any serious accident is going to involve at least $10,000 in medical bills, plus the amount of lost income and an amount to cover pain and suffering. The amount of liability insurance you should buy should be governed by the amount of assets you own. If you are a 19 year old just starting out in life, and do not own a home or have significant savings, it may be okay to purchase $50,000 of liability insurance.
However, if you are an older person, married with children, own your own home and have some savings and two cars, you should seriously consider getting at least $300,000 of liability insurance.
Umbrella Policies. An umbrella policy provides liability over and above the existing insurance that you have. The attractive feature of an umbrella policy is that it acts as excess insurance for your car insurance, your homeowner's insurance, and any other insurance you have. Moreover, although the initial lawyer of insurance is expensive, umbrella policies are generally priced lower, when considering the amount of additional that you obtain. You get a lot of bang for your buck with an umbrella policy.
PIP Insurance. This is usually optional insurance, but you should always purchase a car insurance policy that includes PIP (Personal Injury Protection) as part of your policy. PIP pays for the medical bills, up to a certain amount, of any persons who were injured in your car (including you) regardless of the fault of the accident. Moreover, unlike most health insurance, there is no deductible or co-pay with PIP insurance. The amount of PIP coverage can be as low as $3000 or as high as $30,000 or higher.
Comprehensive Insurance. This usually applies to insurance that provides for the repair or replacement of your car or motorcycle after it is damaged in the accident. If you don't have comprehensive insurance, you will have to rely upon suing the at-fault driver to get your car repaired. If your car is very old, and has little trade in value, you certainly can consider skipping this type of insurance.
Uninsured and Underinsured Motorist Insurance. This insurance is optional, but it is an absolute must. A UIM policy steps into the shoes of the at-fault driver if that driver is uninsured or has an inadequate amount of insurance. For example, if you are seriously injured in an accident, and sustain medical bills and other damages in the amount of $200,000, if the at-fault driver has only the minimum $25,000 of insurance, you will suffer permanent financial loss as a result of the accident. You should purchase UIM in an amount at least equal to the amount of liability insurance that you have.