The Smartest Way to Buy Motor Vehicle Insurance; Bodily Injury, PIP, MedPay, Underinsured Motorist Coverage
Table of Contents to This Article:
Look at a Lot More Than Just COST, Because Comparison Between Companies is Meaningless Without Research on These Three Topics for Each Insurance Company You Are Considering:
So you heard or saw an advertisement for low cost car or motor vehicle insurance and you are thinking of making a switch: DON'T DO IT until you have read about and considered all aspects of such insurance coverage. Otherwise, you might have saved a few bucks, but exposed you and your family to inferior coverage-and, in the case of some hard-nosed companies, exposure to being sued, should you ever cause an accident.
We want to invite our readership to consider some of the important factors that ought to come to mind when one is selecting a company for car or motor vehicle insurance. The airwaves are full of advertisements, and most of them feature some combination of alleged advantages in cost and fast service.
The problem is, there is a lot more to car insurance than just those two factors, and we believe the factors we list herein are MORE important than just fast service or cost. The fact is, car insurance will most likely come to your rescue at some point, so it's imperative to purchase a worthwhile policy.
The very first thing to consider is your knowledge of the product you are about to buy. How can you make a knowledgeable decision, comparing one insurance company's coverage to that offered by another, unless you know what each component of the policy will do for you?
DO NOT COMPARE one car insurance company with another until you have done the necessary research. Companies and their practices just differ too much to allow one to assume certain practices are "standard throughout the industry". For example, while your car insurance company may pay for chiropractic treatments for your eighteen months, the low-cost carrier you are considering might have a hard-nosed policy of terminating chiropractic benefits after only four months. Wouldn't you agree that a person should know that type of defect before jumping in with a new insurance company?
Glossary of Terms to Consider When Buying Insurance
Here is a brief glossary of terms you will encounter during your research:
Motor Vehicle Insurance Company Advertisements Deceive
If some of the millions of dollars spent on advertising car insurance would be devoted to fair payment of injured insured's' own claims against their own motor vehicle insurance company, we probably wouldn't even have to make mention of this. However, the advertisers' portrayal of insurance responsiveness with homey images, friendly messages, beautiful music and promise of quick claims service do not equate to quality when it comes time for payment for personal injury claims following an car accident.
We know that getting your car fixed promptly is important. Some companies may be more responsive on property damage than others, but that should not be your first priority evaluating insurance service. A day or two wait for your car is nothing compared to being literally cheated out of your legitimate payments, as is the practice of some of the more aggressive companies. See the discussion below and the links provided. If getting your car fixed in the fastest time is the most important thing for you, you can ignore everything that is written in the following paragraphs, because they focus on the bodily injury aspects of car insurance claims service.
So, our advice is to ignore the advertising images: the insurance industry did not become one of the wealthiest in America by being everybody's best friend. Understand that these smiling people on television ads are really your adversaries. There are many thousands of reported cases where insured have been forced to sue their own companies. None of these cases has to do with getting people's cars fixed. Prompt property damage repair is the simplest and easiest part of an accident claim. Instead, these lawsuits against insurance companies all are based on claims that an insurance company did not perform according to the law and in accord with its own contractual provisions.
Research Suggestions to Check Out Car Insurance Companies
Our suggestion is that you research two or three companies. A good place to start is with the Better Business Bureau, followed by a contact call to your state Insurance Commissioner. You can call the Better Business Bureau in your own area and learn how to inquire if any complaints have been filed. The most effective research, however, is probably through your state Insurance Commissioner. Use the link provided to contact your Insurance Commissioner and obtain information in five topics, including complaints filed with your state insurance commissioner:
You Get What You Pay For In Purchasing Personal Injury and Vehicle Coverage Auto Insurance Coverage
You have heard the advertisements that one car insurance company is the least expensive, etc. Understand that truth of the old adage applies to insurance policy purchases: you get what you pay for. The best motor vehicle insurance company is probably not the cheapest. How can insurance company policies that save premium costs have adverse impacts upon your wallet?
First, the reason an insurance company is cheaper is that it doesn't pay out as much as another company, nor does it provide as much service. If your own automobile insurance carrier does not pay out in a fair manner, and if you are the defendant in the case (the tortfeasor), expect that your chances of being involved in a lawsuit are much higher than if you were insured with another (quality) insurance carrier.
Since insurance is going to foot the bill anyway, why should that impact you? Well, you'll have to be inconvenienced at home, at work, and at trial. You'll be sued; you will have to take time off of work to see the attorney who will be hired by your insurance company to represent you; and you'll have to testify at depositions and/or trial. Remember, you will not be paid lost wages to participate in your own defense. But in addition to the time involved, it can be very stressful to be in a lawsuit. You will have to answer under oath regarding a number of topics, and your spouse may also have to participate.
However, the biggest impact of adverse treatment to claimants by your own insurance company may not come when you are a defendant, but may come when you are a claimant versus your own company. This could be as a claimant under your own policy, either for payment of medical expenses or payment of wage loss under the Personal Injury Protection (PIP/MedPay) provisions, or for underinsured/uninsured UIM coverage.
It is in these circumstances that many first party carriers become aggressive and literally cheat their own insureds out of legitimate payments. Most consumers have little knowledge of these practices, and aggressive companies are almost always successful in cutting off PIP payments for treatment far earlier than your own doctor would recommend. That is where they make the money and that's where you'll find yourself in need of some help.
The insurance company will respond that you have the right to arbitration. But no attorney is going to become involved in a Personal Injury Protection/Medical Pay (PIP/MedPay) arbitration. There is not enough money at stake to merit the time and effort. You can be at the mercy of the insurance company, so select wisely. In this respect, the least expensive coverage may be no bargain at all.
Be aware that the first party carrier that advertises the cheapest price is likely the one who will deny payment for medical coverage sooner than the other carriers. They can be quite aggressive in this respect as described in all of the IME, Medical Care and the PIP/MedPay sections of our member's site. They will use the ruse of a "records review" or an "independent" medical examiner (IME) to deny payments due to your own doctor/chiropractor for your continued reasonable and necessary care. The so-called "independent" doctor they select is hired by the insurance industry to (nearly always) say that you "have reached maximum medical improvement, and no further treatment is necessary."
The same type of carrier is also the one that will likely seek to limit your recovery on UIM by requesting arbitration more frequently than other carriers. These claims involve all of the damages you would expect to recover from the tortfeasor, including general damages. Thus, there can be quite a bit of money at stake, since general damages are usually a multiple of the cost of your medical care.
In evaluating UIM coverage, see if you can find out from your Insurance Commissioner what percentage of claims are settled, mediated, arbitrated, or tried to a jury (this jury trial clause is inserted by only a few companies). Does your Insurance Commissioner have any idea how often a carrier forces its own insureds into arbitration, rather than agree to the more desirable non-binding mediation forum? Arbitration and mediation usually involve attorneys who are knowledgeable in personal injury matters as mediators or arbitration panel members.
Or, worse, do they force their own UIM claimants to go into court and present their claim to a jury?
Do you have the right to choose arbitration in UIM? Is your insurance company deceiving you with a clause that removes your rights to arbitration? Here is a Specific Question for the Sales Representative Regarding Forcing You to a Jury Trial
Please check your policy and ask the sales representative to be sure that your carrier does not reserve the right to a jury trial in its UIM disputes.
The tricky little phrase used in policies issued in recent years was to the effect that "disputes hereunder will be resolved by arbitration, unless either of the parties elects to have the dispute resolved as in other civil matters". You probably would not see anything wrong with that phrase, but it is deceptive in its apparent innocence. It is a powerful tool and will only benefit the insurer.
That little phrase was intended to give the car insurance company the right to a jury trial in resolving your UIM dispute with your own company. If you and they disagree, you will not have the right to an arbitration; they will just tell you to go file a court action. And the insurer will always ask for a jury trial.
Why don't you want a jury trial? First, you will have to pay to use the court system. You must file the lawsuit, and you will have to serve it (although they will likely accept mail service). Second, there is likely a much longer wait (currently one and a half to two years is common) for you to obtain a jury trial date than there would be to put together an arbitration panel of attorneys. Who wants the delay? The insurance industry makes a lot of money on investments, whereas you will always need the cash to make up for some of the problems caused by the accident. So they want the delay.
Third, it is tremendously more expensive than any other forum for resolution in your time and your costs. In arbitration, you can submit medical records to be read by the arbitration panel, and perhaps call just one of your doctors. You will pay for any time your doctor has to spend in preparation and testimony, so you will want the less formal proceeding (such as arbitration) because her fees will be a fraction of those at trial.
At a jury trial, you must present some live testimony from your doctors. (Although some records can be admitted without the doctor present, attorneys usually want the doctor present to speak to the jury; whereas at UIM arbitration, the attorney knows that the panel of trail attorneys will have some familiarity with the medical specialty, medical terms, prognosis, etc., and your attorney therefore can simply admit the records and argue from them.) The jury testimony of your doctor is expensive, because you will likely pay their full time away from the office, including courtroom waiting time, regardless of the results. It is a delay of a year or two, depending upon your jurisdiction, and it takes a much greater effort to succeed with higher risks than at arbitration. Therefore, the insurance company knows that you are more likely to compromise and accept a lower award than if you went to arbitration. So please consider this an important issue in selecting your company.
Think Preventive-Protect Yourself, Your Family, and Your Passengers Who Might Suffer Debilitating Personal Injuries in an Auto Accident
We've seen far too many cases where the insured, in an effort to save a dollar up front, has left himself, his family, or his passengers exposed with no coverage at all for medical bills. Motor vehicle insurance is a good investment; it is necessary; and, it should be purchased in anticipation of traumatic events. How can you foresee only limited consequences of an accident? You can't.
Here are two examples of places where we have seen insureds deprive themselves of necessary personal injury insurance coverage. The first and most obvious is PIP/MedPay. Insured people who have a good medical plan, an HMO, or who are covered through the military, often think they will rely on their medical plan and decline to take PIP/MedPay personal injury treatment coverages. This is a serious mistake.
Often, medical plans (or military) do not afford anything more than the long gray line of institutionalized medicine, where treatments and referrals are very limited. By contrast, your own PIP/MED PAY allows you to select your own doctor, chiropractor and other health care professionals such as specialists, with much more freedom of choice. Moreover, PIP also pays a portion of your wage loss (MED PAY does not). It would be an error to pass by a chance to purchase PIP.
Please note that your HMO or health plan or military access affords no protection whatsoever for your passengers. What will you tell the parents of the children who were riding with your child on an outing when you cannot cover their medical expenses because another person hit you?
Think About it: You Need to Buy Insurance to Protect Yourself, Family Members, and Passengers by Purchasing Underinsured Motorist Coverage (UIM)
One serious mistake is to decline UIM coverage. Some companies require that you purchase UIM in the same amounts as the liability insurance. However, many companies, depending upon state law, are authorized to sell denominations of UIM coverage less than the liability limits. The insured thinks that he is providing some satisfactory minimal coverage for his family and decides to save some money with lower UIM limits. However, UIM is probably the most important place to spend money.
You are not as likely to cause an accident, as you are to be a victim of an accident. At least if you are taking the time to read this article, you are probably a person who will exercise more care and judgment in your driving than the ordinary person. Therefore, it is more likely that you will be making a claim against another person for injuries sustained by you at the hand of the third party tortfeasor.
In this case, the tortfeasor may (but likely will not) have sufficient insurance to cover you and your passengers for all of your medical expenses, wages loss, and general damages. If not, then the tortfeasor is said to be "underinsured". In that instance, the balance of the value of your claim, above the bodily injury policy limits of the tortfeasor, is the responsibility of your own insurance carrier's UIM coverage.
A third possibility is if the tortfeasor is uninsured. This is a distinct likelihood if someone who is reckless, or who has a drinking problem or who is driving with a suspended license involves you in their traffic habits. They caused you and your passengers harm, but they have no insurance. You will be making your entire claim under your UIM polity limits.
All too often, we have seen serious injuries to individuals and their families receive little or partial compensation because the insured elected to "save money" by not purchasing the maximum UIM coverage available to him. Purchase as much UIM coverage as you can.
Be Honest in Your Dealings With the Insurance Company
A word of caution in dealing with your insurance company: don't try to fool them on any of the information requested, or by insuring only one driver for each of the family vehicles. We have numerous cases holding that one family member is not covered because he or she was not named as a driver of another family vehicle. Questions of whether the vehicle was "available for the regular use" of any individual are complex issues, and history tells that you will lose. Disclose the full number of drivers and you will have the knowledge that you and family members are covered.
The same thing pertains to marital status and student status of children. Our recommendation is to be honest in your application and in your relationship with your motor vehicle insurance company. The few dollars you "save" otherwise will never be a bargain should you loose out in the long run. A contract entered into with materially fraudulent representations can be voidable by the insurance company under some circumstances. In that case, you would have no coverage at all.
Table of Motor Vehicle Insurance Coverage Requirements, by State
Most states require that you have liability insurance. This covers you when you're at fault in an accident. If you live in New Hampshire, South Carolina, Tennessee or Wisconsin, you aren't required by law (yet) to have liability coverage. For the rest of us, the mandatory coverage varies according to state. In the chart below, minimum liability limits are read as follows (in thousands of dollars): bodily injury liability for one person in an accident/bodily injury liability for all people injured in an accident/property damage liability for one accident.
So, for Alabama, the minimum requirements are $20,000 of bodily injury liability for one person, $40,000 bodily injury liability for all people and $10,000 property damage liability.
Who we are |
What we do for you |
Join now! |
our subscriber information. We will never do so. Click here to read the fine print. More