How to Protect Yourself from Uninsured Drivers
An auto accident is something drivers know is a possibility each time they get behind the wheel. You might be the safest driver on the road but this doesn’t insulate you. We can’t control how others drive, no matter how much we might want to.
You’re driving home from work and the statistics take over. A red station wagon fails to yield and hits the passenger’s side of your vehicle. In and of itself, this makes for a horrendous day. It’s about to get worse, however, because the driver who hit you had no auto insurance.
As the economy worsens, this will become a more frequent reality. Once the accident happens, there is little that can be done to protect not only you but the passengers in your vehicle. The easiest way to deal with this issue is long before it happens.
1. Become educated about the auto insurance you’re paying for. Few of us know much about our policies other than the premiums and deductibles. These are the least important items, when we’re involved in an accident.
Liability coverage is the portion of your policy that protects you if you’re responsible for an accident. The minimum amount of coverage required varies by state. It is important to keep in mind the average auto lawsuit is for over a million dollars.
Personal Injury Protection is the next portion of your policy. It is comprised of medical and wage loss coverage.
Your auto policy has medical insurance built into it. This medical can be either primary or excess. Most people with health insurance assume their insurance through their employer will pay first. This used to be a fairly tried and true rule.
Employer based health plans are shifting to excess on auto accidents on a more frequent basis. If you’re employer plan is excess and your auto insurance is excess, you could be in the ultimate frustrating situation trying out who will pay. Check with your Human Resources department at work to see how your plan is structured and make any changes necessary to your auto policy.
The second portion is wage loss. This can be structured as either full or excess. This is one of the more economical disability policies one can purchase, so I highly suggest everyone selecting full. The benefits of this come to you tax free and can be a great assistance, when you’re injured and unable to work.
Uninsured motorist coverage is of central importance in the accident scenario detailed above. This coverage in your policy acts like a safety net, when you’re in an accident with an uninsured driver. It will pay out to you and your passengers for any injuries.
Underinsured motorist coverage can be equally important. This coverage kicks in, when the person who hit your vehicle has auto insurance but low liability limits. Your policy then pays anything you or your passengers are rewarded in excess of their liability limits.
There are a few caveats to underinsured. First of all, your policy will only pay if your underinsured limits are in excess of the other driver’s liability limits. Many people think they have underinsured coverage and don’t. It’s often lumped together with uninsured on your declaration pages. Make sure to specifically ask your agent if you have the coverage because some of the largest insurance companies in the country don’t even offer the coverage.
2. Locate your auto insurance declaration pages now that you have a better understanding of how insurance works. Examine your coverage for each of the areas we covered above. Talk with your insurance agent to adjust your coverage to protect you and your family.
3. The greatest asset most people have is their ability to earn an income. There is a real possibility that an auto accident will leave you out of work for some period of time. Sign-up for any short and long-term disability offered through your employer.
4. An ample cash reserve will stop the uninsured driver from destroying your financial situation and strapping you with debt. Medical bills and being out of work can quickly destroy finances. Three to six months of your expenses in a cash reserve will prevent this.