Car Insurance 101

Insurance PolicyWe don’t sell auto insurance, but we’ve learned a lot about it in 18 years of car accident injury work. Mostly, that there are many misconceptions about coverage, and many injury victims are disappointed. For example:  Let’s say you’re seriously injured by a negligent driver. You require hospitalization, surgery, and follow-up therapy. You also lose time at work, and you are never quite the same. So you request compensation from the other driver’s insurance. Unfortunately, the negligent driver only has minimum liability coverage ($25,000). The real shocker comes when you discover that your UIM coverage was only $25,000. Therefore, the maximum insurance available to compensate you is only $50,000 – a fraction of what you need.

So what went wrong? For starters, let’s review some basic terminology:

  1. Liability Insurance—protects your assets if you cause an accident and hurt someone. Your insurance could pay the person you injured up to the limits of this coverage. Nebraska requires a minimum of $25,000 in liability coverage.
  2. Uninsured Motorist Insurance (UM)—protects you against a driver with no insurance. Your insurance could pay your damages (medical expenses, pain and suffering, wage loss, etc.) up to the limits of your UM coverage.
  3. Underinsured Motorist Insurance (UIM)—protects you against an underinsured driver who doesn’t have sufficient liability coverage to pay for your injuries (see “example”). Here again, your insurance company could pay you up to the limits of this coverage. Nebraska requires a minimum of $25,000 in UM and UIM insurance.

So how do you protect yourself? Simple, buy more insurance. Thankfully, 10 times your current coverage won’t cost you 10 times as much. More likely $300-$500 extra per year. This will vary, of course, but the cost of two extra-large pizzas a month seems a small price to pay for protection against a life-changing catastrophe.

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