Know Your Insurance Coverage

The Following is a Public Service Announcement:

I can not stress how important it is to know how much insurance coverage you have. The State of California only requires you to carry 15/30/5 liability coverage. So what does that mean? I'll explain.

The first 2 numbers (15/30) represent bodily injury coverage. What it means is that for each accident you are in your insurance company can pay up to $15,000 for injuries to any one person, and up to $30,000 total for all injuries. Sounds like a lot, right? Guess again. If somebody in the other car receives treatment at the scene of the accident, or has to be air-lifted to a hospital, you will most likely be facing a limits problem. Medical treatment is expensive.

The last number (5) represents property damage liability coverage. This means that if you are at fault for an accident your insurance company can only pay up to $5,000 for that accident. Sound like a lot? Nope! Let me put it to you this way, I can do $5,000 worth of damage to a car with my foot if I kick it in the right place. Cars are expensive to fix, believe me!

You may be saying to yourself, so what? Well, here's what's what. If you cause more damage than your policy covers guess who is on the hook? If you said yourself, you are correct. The other driver, or even worse, the other insurance company is coming to get you! And we gonna gets our money, not half of it, not some of it, but all our cash!

Real Life Example:

I have a customer who has 15/30/10 limits. He proceeded to make a left hand turn and crash into a $70,000 car. My driver was at fault, and the other car was jacked. So in short, my driver has $10,000 worth of coverage, and the other driver has $30,000 in damages. The other insurance company paid for the other driver's damages because he has collision coverage, and now wants to be paid back. We can only give them $10,000, and as it turns out they are not willing to look the other way on the extra $20,000. So I have to send a letter to my customer:

Dear Mr. Customer,

Congratulations! You're being sued! And the best part is you've learned an invaluable lesson about policy limits! In the future you may want to A.) Get real policy limits, or B.) Hit a cheaper car. See you in court!

Love,
Your Adjuster

The moral of the story? If you have $10,000 limits, don't hit a $70,000 car :)