Happy Patriots' Day!
Today is the third Monday of April, or Patriots' Day here in New England. The holiday is in observance of the Battles of Lexington and Concord (fought on April 19, 1775) and the beginning of the American Revolutionary War to gain American independence from Great Britain.
It is also the last day to file your taxes.
It is also a good reminder to review your motor vehicle insurance to ensure that one's personal financial health is protected.
To better understand motor vehicle insurance the Connecticut Insurance Department has defined some basic terms:
“Liability insurance covers bodily injury to other people and damage to the property of others caused by your negligence or the negligence of someone driving your car with your permission. A minimum of $25,000 per person and $50,000 per accident for bodily injury liability and $25,000 per accident for property damage liability is required by law, but drivers are strongly urged to consider higher limits.
Uninsured/underinsured motorist coverage covers bodily injury to you, your relatives who live with you and your passengers if they are injured in an accident caused by an uninsured motorist, a motorist whose bodily injury liability limits are less than your uninsured/underinsured motorist limits or a hit-and-run driver. The standard coverage is an amount equal to your bodily injury liability coverage, but you may purchase additional coverage up to an amount double your bodily injury liability. The minimum amount required by law is $25,000 per person, $50,000 per accident.
Underinsured motorist conversion coverage also provides for reimbursement in case you are injured by an underinsured driver. If your damages exceed the at-fault driver's insurance, or other payments, your underinsured motorist conversion coverage will be available for damages not paid. This optional coverage is not reduced by payments from any other source, including the at-fault driver's liability insurance.
For example, if you have uninsured/underinsured coverage of $300,000 and you sustain $400,000 in personal injuries caused by an at-fault driver with $200,000 in bodily injury liability, without underinsured conversion coverage you would only be able to collect the $200,000 from the other driver's insurance plus $100,000 from your own underinsured coverage, which equals your $300,000 limit minus the $200,000 collected from the other driver's insurance. With conversion coverage, you could collect the full $200,000 from your own underinsured coverage.
Basic reparations or medical payments coverage. This optional coverage replaces formerly mandatory coverage and provides for medical payments, and in some cases, lost wages and funeral expenses if you or a relative living with you are injured or killed in an accident.
Collision coverage covers damage to your car caused by collision with another vehicle or object or by your car turning over. There is almost always a deductible which you must pay if you repair or replace the car.
Comprehensive coverage covers damage to your car other than that caused by collision, including theft, vandalism, impact with animals or birds, explosion, flood, falling objects, windstorm and glass breakage. As with collision coverage, there is usually a deductible.
Full glass coverage covers your car's glass for breakage of safety glass with no deductible for an extra premium. Towing coverage covers the expense of towing your car to a shop. Rental reimbursement pays toward the expense of renting a vehicle if you have a loss covered by either collision or comprehensive coverage and your car is disabled.”
Personally, here is what I always advise:
- Purchase the absolute *highest liability coverage that you can afford. There are two reasons. First, you want to make sure that you have enough coverage if you are at fault so your insurance pays for the loss and not you. Second, and as important, the liability coverage impacts how much uninsured/underinsured motorist benefit coverage you can purchase.
- Purchase the absolute most uninsured/underinsured motorist coverage liability coverage you can afford. In Connecticut you can double the uninsured/underinsured motorist benefit from what your liability coverage is (see why that is so important?). The uninsured/underinsured motorist coverage is to protect you and your passengers if an at-fault driver does not have enough insurance to coverage all of your harms and losses.
- Purchase conversion coverage for underinsured motorist benefit coverage.
- Purchase as much medical payments coverage as you can.
- Consider purchasing collision coverage. If you finance a new or newer vehicle this will not be optional. However, even if you do not finance the vehicle if you are completely or even partly at fault for the collision and your vehicle is damaged (or totaled) you will then have to pay personally to fix or replace your vehicle.
*NOTE: If you are a homeowner you will need at least $250,000 in coverage (check with your insurance carrier for their requirements) in order to purchase an optional homeowner “umbrella policy”. If you own a home you should always purchase this umbrella coverage.
If you are still reading this article congratulations! You have already started your review. Now all you have to do is order a copy of your vehicle's “declaration page”, basically a summary of all coverage, and increase your coverage as appropriate.
If you would like help understanding these important coverages please email me and we can set up a time to talk.
Happy Patriots' Day!