As a lawyer, I am often asked, “What type of automobile insurance should I have?” Although the law requires a minimum level of insurance, it is very important to have the proper combination of insurance to truly protect you and your loved ones.
Let me begin by explaining the different types of automobile insurance. At the end of the article, I will tell you, based on years of experience, which is the best combination of insurance that you should have.
Liability insurance protects you as the driver of your vehicle for bodily injuries and property damages endured by another person or vehicle if you are at fault for the accident. However, it does not provide you, the insured driver of the vehicle, any coverage for injuries to you or damage to your own vehicle. Nevada requires that all drivers carry a minimum policy of $15,000/$30,000 for bodily injury. What this means is that you would be covered for up to $15,000 per person for the bodily injuries caused as the result of the accident, but no more than $30,000 total.
By way of example, if you were to injure 5 individuals in another car, your insurance carrier would only pay out a maximum of $30,000 on your behalf, even though there may be over $100,000 worth of damages. Consequently, you would be responsible for the remaining $70,000.
Nevada also requires that all drivers carry a minimum policy of $10,000 for property damage. Any property damages above and beyond that, you would be personally responsible for as well.
It becomes apparent that the statutory minimums are inadequate should you be involved in a serious accident. Keep in mind that liability insurance does not cover any aspect of an accident that was not your fault. If someone else slams into your car from behind at a stop light and you only have the required liability insurance, the only insurance available to you will be what the other driver has on their vehicle. Unfortunately, if they have no insurance, or only the minimum amounts required, then you may be the one with the $100,000 loss and no insurance to cover it.
Collision coverage is for property damage to your vehicle, regardless of who was at fault. With collision coverage, you have the comfort of knowing that even if the other driver lied about what happened to cause the accident – your car is going to get fixed. Your insurer may pay for the repairs up front to get your car fixed quickly, and then later pursue the other insurance company for indemnification of any money they spent on damages caused by the other driver. Usually this type of coverage will pay for the repair bill for your vehicle, or in some instances, after a written estimate is completed by an approved repair shop, your insurance may simply send you a check to cover the repair, minus your deductible.
Comprehensive Insurance covers you for all the rest of the things that can go wrong with your vehicle, including, but not limited to; hail storm damage, floods, theft, vandalism, a falling tree, or hitting a deer (or in this state – a donkey). This is the type of insurance that kicks-in when things go wrong that mother-nature may have had her hand in.
Uninsured Motorist and Underinsured Motorist Coverage
Next in line is what I would argue is the most important insurance coverage that we should all have, yet many of us do not. Many Nevada motorists simply carry the minimum liability coverage, causing uninsured motorist and underinsured motorist (UM/UIM) coverage to be extremely important. Without it, you could end up like the example above, with $100,000 in damages and no insurance to cover you.
What is UM/UIM coverage? It is very straightforward and simple. uninsured motorist (UM) insurance covers you against the irresponsible driver that causes an accident, yet has no automobile insurance.
How about that 19-year-old boy out for a joy ride in his father’s old rusty unregistered pick-up truck who slams into the passenger side of your car as he runs a red light. That pick-up truck has no insurance on it and that 19-year-old has no assets. You are in the hospital recovering, unable to work, all while accruing medical bills. Junior shrugs his shoulders and says, “Sorry.” If you don’t have UM coverage, then a “sorry” is all you will get for the medical bills, pain and suffering, and inability to work and generate an income.
Imagine having $25,000 in medical bills and $25,000 lost wages from missed work. All of it occurs within the blink of an eye, yet the inconvenience associated with the incident will go on for years. Having UM coverage added to your policy is a must. If you had $50,000 UM/UIM coverage, then your own insurance company would pay for all of the damages listed above (up to your policy limit). Keep in mind that generally the amount of UM/UIM coverage must be equal to or less than the amount of your liability coverage.
Underinsured motorist (UIM) coverage operates similarly, covering the excess damages above and beyond the at-fault driver’s policy limits. For instance, let’s say the 19-year-old’s dad carried the Nevada minimum coverage on the truck. In that instance, his insurance would pay out the policy maximum of $15,000 to you, and your own UIM insurance coverage would kick in and pay you the remaining $35,000. Keep in mind that if you do not have any UM/UIM coverage at all, then that remaining $35,000 would have to come out of your own pocket.
We simply cannot rely on the responsibility of other drivers to do the right thing and have adequate insurance. It is up to us to have good UM/UIM insurance coverage to eliminate the likelihood of the other driver in an accident either not having any insurance or only having the minimum allowable by law.
Medical Payment (Medpay) coverage
Medical payment (Medpay) coverage pays for the medical treatment of the policyholder and your passengers, regardless of fault, for all injuries stemming from the accident. So, if you have $10,000 of Medpay coverage, after an accident, all medical bills up to $10,000 per person, regardless of the number of passengers there were, would be covered. There is no deductible for Medpay and usually insurance companies issue these funds to cover medical bill without much delay. Medpay coverage is also considered relatively inexpensive and is quite a value for the cost. Medpay is purchased in conjunction with liability and/or collision insurance and cannot exist on its own.
Umbrella Insurance is a secondary liability insurance, usually offered in $1 million, $3 million and $5 million amounts. This type of insurance is designed to shield your assets by covering damages in excess of, or not covered by, your other insurance policies.
Without an umbrella policy: If you were involved in an accident because you were texting while driving, slammed into a car in front of you and permanently disfigured the driver, you may be obligated through an arbitration, settlement or jury verdict to pay the victim of the accident $1,000,000. If your Liability Insurance coverage was 100/300, then you would only have $100,000 of the amount owed to the injured party covered by insurance. As a result, you would be personally liable for the remaining $900,000 through liquidation of your assets and/or a lifetime garnishment of your wages.
Having umbrella insurance coverage protects against this type of large loss. Your 100/300 Liability Insurance coverage would pay the deductible of the umbrella policy, in this example of $100,000 and then the umbrella coverage would pay out the full $1 million to the injured party. To put this in perspective, many $1 million umbrella insurance policies cost only $400+ a year. For that cost, the amount of protection provided is fairly large.
So, now that you know a few of the varying types of insurance policies and what they cover, what is the best insurance combination for you to have? Heed my advice: In a fast-paced and busy city like this, as an absolute minimum, you should carry both liability insurance and UM/UIM coverage. The dollar amounts of the coverage will vary dramatically based on your economic situation and perhaps the existence of specific assets which you hope to protect. I am giving you the legal advice here today that yes, having only liability insurance complies with the law, but it does not completely protect you.
Protect yourself and your future by having at least liability insurance coverage coupled with UM/UIM insurance coverage. Obtaining umbrella insurance is also strongly encouraged if you hope to be protected against larger catastrophic loss caused by an accident.
We never know when disaster will strike. Therefore, it is best to be prepared when and if it ever does. It is better to have too much insurance and never use it than it is to have too little insurance and need more of it. Do the right thing and protect yourself.
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This information is for educational purposes and should not be considered specific legal advice. Always consult with a qualified attorney regarding your individual circumstances.
Marc Saggese is the owner of The Law Offices of Saggese & Associates. He has been a Las Vegas personal injury and criminal defense attorney for over 15 years. Mr. Saggese writes weekly about various issues of the law for reviewjournal.com. For more information visitwww.MaxLawNV.com or connect with him on Twitter, Facebook or Linkedin.