Robert L. Mertig, Claims Consultant

Author: Claims Consultant Robert L. Mertig

Many states have minimum limits for automobile liability insurance.  In Virginia, this minimum is $25,000 per person and $50,000 per accident.[1] Because car insurance can be expensive, many people are tempted to purchase only the minimum.  There are good reasons, however, to purchase  limits that exceed the 25/50 state minimum.

First, the insurance company’s responsibility is to pay the limits of liability coverage if the injury claim is severe enough and to try and obtain a release on behalf of their policyholder.  The insurance company may not be able to obtain a release if the coverage is not sufficient to compensate the injured person, and the insured person will be personally responsible for the excess.  Thus, many people purchase automobile liability insurance with limits of at least 250/500 to protect themselves in case they are at fault in an accident.

Second, the increased coverage also provides additional compensation to the policyholder if someone else is at fault and the at-fault party does not have adequate coverage to compensate the insured for his injury.  The insured can then look to his uninsured motorist (UM) coverage for additional compensation for his injuries and losses. [2]

I would urge all drivers to contact their car insurance company or agent, and discuss increasing their liability and uninsured motorist policy limits.  It is important that the UM and liability limits are the same.  Unfortunately I have seen instances where an individual reduced his UM limits at the suggestion of his agent to reduce his premium.  This type of action is only advantageous to the insurance company by reducing their exposure.  It is not to the benefit of the policyholder.

I highly recommend that everyone review their automobile liability  and homeowner’s policies on an annual basis to make sure the coverage is adequate and there have been no changes unless requested by you, the policyholder.  It’s not a bad idea to shop around periodically, too, to make sure you are not paying too much.

About the Author: Bob Mertig is a claims consultant working under the supervision of Petersburg car accident lawyer Paul Hux. Bob assists clients in resolving their personal injury claims.

Robert L. Mertig, Claims Consultant

Author: Claims Consultant Robert L. Mertig

I have read many articles recommending that consumers cancel the collision coverage on their vehicle’s car insurance policy once it reaches a certain age.  However, my many years spent in the field of insurance has shown me that this is almost always a bad idea.  Authors often present cancellation as a way to save money, arguing that there is no reason to carry collision coverage on an older model vehicle.  They reason that, due to the lower value of an older vehicle, the vehicle’s worth does not justify the coverage cost.   However, this is a half truth; it means nothing unless you are able to absorb the loss if the vehicle is wrecked and you are the at fault party.  For instance, you may be able to pay a few dollars a month more in your auto insurance bill for collision coverage, but if your vehicle was destroyed in an accident that was your fault, you may not be able to afford the several thousand dollars needed to replace the vehicle. In my experience, collision coverage does not greatly increase the cost of your policy.

Comprehensive coverage, which offers protection from fire, theft, vandalism, flood and broken glass, also does not cost much more per month.  If your windshield was broken, however, the cost to replace the windshield could easily be in the hundreds of dollars, outweighing the relatively minor cost for comprehensive coverage.

Unfortunately, many of us are “penny wise and pound foolish”, and are tempted to drop the collision and comprehensive coverages on an older vehicle.  I urge all insureds to reconsider dropping this coverage unless they are prepared to pay in full for the consequences.

About the Author: Bob Mertig is a claims consultant working under the supervision of Petersburg accident lawyer Paul Hux. Bob assists clients in resolving their personal injury claims.

Attorney Priscilla R. Woody

Author: Attorney Priscilla R. Woody

When I first meet a client who have been injured through no fault of their own, one of my first questions is: “How much insurance do you have?” Most clients answer, “I have full coverage.” However, when we review their declaration page and policy, the clients are surprised to learn that they have minimal insurance coverage on their vehicles. The confusion comes from a misunderstanding of what the terms “full coverage”, liability coverage and “amount of coverage” actually mean.

The situation becomes more difficult when we learn that the person that injured the client either doesn’t have insurance or doesn’t have enough insurance. The high cost of new automobiles, automobile repair work and health care often means the minimal limit required under the Commonwealth of Virginia laws ($25,000/$50,000/$20,000) is not enough money to cover the clients’ damages and pain and suffering.1

Although you can never be certain that a driver who injures you will have insurance or enough insurance, your ability to buy additional uninsured (UM) and underinsured (UIM) motorist coverage gives you control over your own financial security. The amount of UM/UIM coverage you purchase will equal the amount of liability coverage unless you specifically request a lower amount.

UM/UIM coverage protects you in the event you are injured by a driver who does not have insurance, a driver with liability coverage less than your total uninsured motorist coverage, a driver whose liability limits are not enough to cover your losses or a John Doe (hit-and-run unknown driver). If you can afford more than the minimum required limits, you should buy more insurance to protect yourself against others you may injure or those that may injure you.

Liability Only Car Insurance

Within the auto insurance field, the terms “full coverage”, liability coverage and “amount of coverage” mean different things and there are many levels between “full coverage” and “liability only”. Automobile insurance can best understood by first fully comprehending the differences between “full coverage” and liability only coverage.

Liability coverage is insurance that covers damage you cause to other people and their property. As suggested above, it may be wise to carry coverage in excess of the minimum limits. For example, if in Virginia you were in an accident that caused $100,000 in bodily injury damages to another motorist, your insurance would only cover the first $25,000. For the other $75,000 the injured motorist could come after you personally! But we often see the flip side – if you were injured person with over $100,000 in bodily injury damages and the motorist who caused the accident only had a 25/50/25 policy; if you also had minimum limits you would not be fully compensated for your loss because you could only get the $25,000 limit from the at fault motorist’s insurance company. However if you had a $100,000 UM/UIM policy, you could collect $75,000 from your insurance company for your damages; or if you had $50,000 a UM/UIM policy, you could collect $50, 000 from your insurance company.2

In Virginia, the required minimum insurance limits by law are liability coverage for bodily injury or death of one person in the amount of $25,000; bodily injury or death of two or more persons of $50,000; and property damage coverage of $20,000.3 When referring to liability limits, the insurance industry uses an abbreviation that can be confusing. The required minimum limits are designed as $25,000 / $50,000 / $20,000 or 25/50/20; these designations refer to the maximum amount that an insurance company will pay out under the three basic liability coverages. Some policies have a single limit of liability where some insurance companies sell a policy that covers bodily injury liability per person, bodily injury liability per accident, and property damage liability but does not have separate limits. The single limit must be at least $70,000 to satisfy the financial responsibility laws although limits up to $1,000,000 can be purchased. This limit of liability applies to all bodily injury and property damage liability losses that occur as a result of any one accident for which the insured is legally liable.
Full Coverage

The term “full coverage” can be misleading because there are a number of optional coverages – in addition to liability coverage – that you can buy. Generally “full coverage” includes collision coverage and comprehensive coverage. Collision coverage is an optional add-on to comprehensive – although it isn’t optional if you still owe money on your car because the finance company or bank usually requires this coverage. Collision coverage can be a required part of your car insurance coverage if your vehicle is financed or leased.

Finance companies require borrowers to carry full car insurance coverage on their vehicles- collision and comprehensive – because they want to be assured that if the car is damaged or destroyed, they can recover their money back. Comprehensive insurance coverage help pays for damage to your vehicle not covered by collision. Examples include damage or loss due to theft, vandalism, falling objects, fire, storms, flood, and certain other natural disasters. Collision coverage helps pay for damage to your vehicle if you hit another vehicle, another vehicle hits you, or your vehicle rolls over. The insurance companies confuse the issue by including accidents with animals as part of comprehensive coverage, rather than collision.4

Uninsured or underinsured motorist coverage helps pay for damage to you and your vehicle if there is injury and property damage in an accident caused by an uninsured, underinsured, or unidentified driver.

Medical expense benefits pay for medical costs for you and your passengers in the event of an accident regardless of who is at fault.

Loss of income due to injuries from an automobile accident is important if you do not already have some short term or long term disability benefits.

Rental car reimbursement pays for rental car and other transportation such as a bus or subway if you car cannot be driven due to an at-fault accident or comprehensive claim.

Towing and labor reimburse for towing and roadside assistance charges if a vehicle with car insurance coverage is disabled. Typical services include battery jump starting, tire changing, and locksmith services.

How Much $$$ Should You Spend

So having “full coverage” may not be the same as having an amount of coverage which covers your potential risk. The amount of coverage you need is correlated to the amount of assets you have and the amount of money that you can afford to pay for coverage. But higher limits of coverage also protect you in case the driver who injures you does not have sufficient coverage to compensate you for your injuries and losses, because you can use your underinsured coverage when that happens. The key is to decide how much you can pay in the event of an accident without causing financial hardship.

If you do not have insurance, anything of value that you own including your home, savings, future wages and other assets, may be taken to pay for those losses. Liability insurance will protect you so this does not happen. Liability insurance pays for a lawyer to defend you against any claim or lawsuit.

You should purchase auto insurance in case you cause an automobile accident and you may be responsible for losses of other people involved. A claim may be made or a lawsuit filed against you for those losses. You may have to pay not only for the property damage you cause, but also for the medical expenses, lost wages, pain and suffering, and other losses you cause to someone else. The amount of money you may have to be pay could be substantial.

You should also purchase auto insurance to cover your injuries or damages to your vehicle. These optional coverages will pay you for your losses whether or not you caused the accident.5

About the Author: Priscilla Woody is a car accident attorney with the law firm of Allen & Allen. Priscilla works primarily in the Richmond office of the personal injury law firm.

2 – For more information, see blog articles “Auto Insurance – The Coverages You Should Have BEFORE You Are Involved In An Accident “ at http://www.allenandallen.com/blog/auto-insurance.html, and “Look Out For The Other Guy – Uninsured and Under Insured Motorist Coverage’ at http://www.allenandallen.com/blog/look-out-for-the-other-guy-uninsured-and-under-insured-motorist-coverage.html.

3 – See Va. Code sec. 46.2-472 at http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+46.2-472.

4 – For a fuller explanation of what these coverages are, see blog article “Auto Insurance – The Coverages You Should Have BEFORE You Are Involved In An Accident“ at http://www.allenandallen.com/blog/auto-insurance.html.

5 – See also blog article “How Much Insurance Coverage Should You Buy?” at http://www.allenandallen.com/blog/how-much-auto-insurance-should-you-buy.html.

Attorney R. Clayton Allen

By Attorney R. Clayton Allen

While talking to a client today about their auto insurance, I was reminded of a number of misconceptions and misunderstandings many people have about motor vehicle insurance. Here are four of the most common ones I hear.

Myth #1. “The better known insurance companies offer better coverage, so it’s safer to be with one of those.”

The Virginia State Corporation Commission (SCC) Bureau of Insurance issues a form “family automobile insurance policy”. (1) All consumer family auto insurance policies sold in Virginia must provide the coverage specified in the form policy. If a policy offers less, Virginia law provides that the policy is “deemed” to conform to the requirements. In 25 years of practicing only personal injury law in Virginia, I’ve only seen one insurance policy that offered more than the required minimum, and that difference would only apply in an obscure situation unlikely to ever occur. So, in terms of what the policy offers in the small print, buying an auto policy in Virginia is kind of like buying a bag of sugar in the grocery store. One bag might be Domino and another might be Imperial, but let’s face it, a bag of sugar is a bag of sugar. Insurance policies are the same. The real differences between companies are price and service, not what they are selling.

Myth #2. “Insurance companies are regulated, so one company is about the same price as another.”

Auto insurance companies are regulated in Virginia as to what the policy offers, and they have to have a “charter” to be able to sell insurance in Virginia, but family auto insurance policy rates are not regulated. The insurance companies can charge whatever they want. Some years ago I heard the state Commissioner of Insurance say he was frustrated because consumers in Virginia pay too much for their auto insurance, but the reason they do is because they don’t shop around. “The same person who will go to one grocery store over another because they can save 50¢ on a loaf of bread won’t pick up the phone and shop around to save themselves hundreds of dollars on their insurance policy.” (He also said that auto insurance is kind of like religion for some people; they have what their parents have, and don’t really think about it). In fact, to encourage people to shop around, the Virginia Bureau of Insurance offers a free booklet that has an “Automobile Insurance Quotation Worksheet” in the back to help people shop for insurance. (2) They also offer “Sample Premium Tables” that show rate quotes they received for a person of a certain age with the same driving record. In the 2006 pamphlet, it shows that quotes for the same 45 year old married adult living in Richmond varied from $778 to over $3,440! (One warning about the quotes; whatever company was low when that booklet was prepared may not be among the lowest now, because companies adjust their rates year to year based on their claims experience, sales goals, and many other factors. The best way to check is to shop around).

Myth #3. “All the companies are regulated as to how they do business, so the service they provide is about the same.”

Although insurance companies in Virginia are regulated as to some aspects of how they do business, they are not really regulated as to the level of service they provide. My experience is that when it comes to handling claims, they are all at best rather poor. There are a handful of companies that are really bad, but if you do as the Bureau of Insurance recommends and shop around, you are not likely to end up with one of the really bad ones. Why? Because the bad ones tend to be among the ones that advertise a lot, and since all that advertising costs money, they tend to be more expensive! As with most things you buy these days, you need to be a sophisticated consumer. If you are not happy with the price you are paying or the service you are getting, shop around. (On the other hand, how often are you likely to use your auto insurance or make a claim? The average person is not likely to use their insurance more than once every 5 or 10 years, so if you can save $100 a year with one company over another one, how much worse does the service have to be every 5 or 10 years when you actually use it? And remember, all of them are pretty bad. So the service is about the same, which means it’s all the more important not to pay too much.) The American Association for Justice named their “Ten Worst Insurance Companies in America” in a recent report. Click here to read more.

Myth #4. “I don’t have a lot of assets, so I don’t really need more than the minimum limit.”

The limits you buy of liability coverage on your auto insurance policy serves two basic purposes. First, if you cause an accident, then the limits of insurance protects your personal assets. If the amount of the damage or injury you cause is greater than the limit on your policy, then after your insurance company pays the limits then you are personally responsible for the amount greater than that limit. An injured person could sue you and get a large judgment. So you can protect your assets by purchasing a sufficiently high limit.

The second purpose for having a sufficiently high insurance policy limit is because, under Virginia law, you automatically have an equal limit of “uninsured motorist” and “underinsured motorist” coverage. (3) If you, a family member who lives in your household, or a passenger in your car is injured, and the person who causes the injury has no insurance or a limit less than yours, then your own company will pay up to the difference. For instance, if you have a policy with limits of $100,000 and are seriously injured, and the person causing your injuries only has a policy with the minimum limits of $25,000, the at-fault driver’s company would pay their $25,000 and then your company would pay up to the difference (that is, up to $75,000 more) to equal the limit you have of $100,000. So higher insurance policy limits not only protect you and your assets, they also protect you and your family against a driver how has no insurance or not enough.

About the Author: Clayton Allen is a Richmond car accident attorney with the law firm of Allen & Allen. He has over 25 years of experience handling personal injury cases protecting plaintiffs’ rights against the auto insurance industry.

(2) “Auto Insurance: Consumer’s Guide”, Prepared by the Commonwealth of Virginia State Corporation Commission (SCC) Bureau of Insurance, available free by calling 804-371-9185 or tollfree 877-310-6560. If you call, be sure and ask for the companion “Auto Insurance: Sample Premium Tables” pamphlet for the most recent year.

(3) You can choose to make your UM and UIM limits less than your liability limit, if you request that in writing, but that’s rarely done and is a very bad idea.

Attorney Christopher A. Meyer

Very seldom do we discuss the details of Virginia Supreme Court decisions interpreting insurance contracts; these are true lawyer issues that can put normal folks to sleep.  But this recent case is important if you are in an automobile accident and are seriously injured.  So important that if you are seriously injured and don’t at least ask a lawyer about this you may leave a lot of money that should be yours in the insurance company’s pocket.

As you probably know automobile insurance contracts contain maximum limits of coverage.  If a driver crashes into the rear of another car and injures someone, then the at-fault driver can be sued and his insurance company will pay the judgment.  However, regardless of the amount of the verdict, the insurance company only has to pay its maximum limit of per person coverage stated in the policy.

The at-fault driver then has an excess judgment against them for the amount over the maximum limit, but very rarely does anyone have significant personal assets to pay such a judgment.  Furthermore, most such excess verdicts can be eliminated in bankruptcy court.   We have represented many people with crippling injuries, and hundreds of thousands of dollars in medical bills alone, who can only collect $25,000 or $50,000 because that is all the insurance the person who caused the accident has and there are no other reachable assets.

People can protect themselves from this problem by buying higher limits on own automobile insurance policy.  All automobile insurance policies in Virginia are required to include something called “underinsured motorist” coverage.  Basically this coverage provides that if you are in an accident and the defendant (the at-fault driver) has inadequate insurance coverage limits, say $25,000, but you as the injured person have an insurance policy with a higher coverage limit, say $100,000, then your insurance policy will pay the difference.  In this case example, your company would pay $75,000, in addition to the $25,000 paid by the at-fault driver’s insurance company, assuming that the injuries and liability are sufficient to warrant that much.

The Virginia Farm Bureau v. Williams case, which was decided by the Virginia Supreme Court on June 4, 2009, adds a complicated wrinkle to this analysis.  Suppose in our example the at-fault driver is on his or her cell phone, totally ignores the traffic in front, and smashes into the back of another car causing the driver of that stopped car to suffer numerous broken ribs and broken legs which requires months in the hospital to recover and the medical bills alone exceed $400,000.  Suppose that the at-fault driver has only a $25,000 policy, which is actually the minimum limit that is legal in Virginia.  Suppose the injured person has a policy that covers them up to $100,000 but there are three cars on that policy.  Before Virginia Farm Bureau v. Williams, we thought the law was that the injured person’s insurance carrier would have to pay only another $75,000.  In the Virginia Farm Bureau v. Williams case, the Virginia Supreme Court decided that in some circumstances the injured person’s insurance company might have to cover separately for each car on the policy.  After all, look at the declarations age.  The insurance company with three cars on the policy usually charges three separate premiums for underinsured motorist coverage, so why shouldn’t there be three separate coverages which can be added up or “stacked”?  In this example, the three coverages would total $300,000, by adding up the $100,000 limit for each of the three cars on the policy. After deducting the $25,000 that the at-fault driver’s own company would owe, there would be up to another $275,000 available from the injured person’s own insurance company.  This total of $300,000 would be a far better result that a mere $100,000.

The analysis is quite complicated and the case applies to Virginia insurance contracts only.  Other states have different rules. Lawyers disagree on the circumstances when this kind of stacking is allowed and when it is not.  However, if you are seriously injured by the fault of another driver and have insurance of your own, you owe it to yourself to seek the services of an attorney and ask whether this case might apply to your situation.  In the Virginia Farm Bureau v. Williams case, the injured person was eligible for an additional $550,000 based upon the particular policy language in that policy.

Most lawyers, like those in our Firm, do not charge for an initial consultation.  Bring your policy in and let us look at it, and we will be able to give you some advice on what options you have.

About the Author: Chris Meyer is a Richmond car accident lawyer with the firm Allen, Allen, Allen & Allen.

Author’s Note: On September 18, 2009, the Virginia Supreme Court announced that it would rehear this case. This means that they are reconsidering the legal opinion that they just wrote. This is rarely done, and usually the Court makes some minor adjustments in its language after a rehearing. However, technically, the opinion is withdrawn for further consideration.

There’s not much you can do to prevent a car crash caused by someone else, but there is a lot you can do to protect yourself from the consequences of being hit by an uninsured or underinsured motorist.

The economic downturn has increased the number of uninsured cars on the road. According to The Insurance Research Council, in 2003 14.9% of cars on the road were uninsured. As the economy improved, that dropped to 13.8% by 2007. However, as the economy has weakened, the percentage of uninsured cars on the road has started back up. For each 1% increase in the unemployment rate, the Insurance Research Council has found a ¾% increase in the uninsured motorist rate. By 2010, 16.1% of all cars on the road are expected to be uninsured.

So what can you do to protect your family against an uninsured motorist? The first thing you can do is to find and read the Declarations page of your family automobile insurance policy. The Declarations page is often the opening page of the policy. It has the name of the insurance company at the top, your name and address as the insured, and a listing of all the vehicles insured by the policy. Near each vehicle listed you will find the coverage provided by the policy.

The next thing to do is to determine whether you have sufficient limits of insurance coverage on your policy. The two basic coverages on every policy are Liability Coverage and Uninsured/Underinsured Coverage. The first listed is Liability Coverage, usually listed in an amount such as 25/50, 50/100, or 100/300. This means that if you are at fault and hit someone, the company will pay up to these limit amounts multiplied by $1000. For example, 25/50 means your insurance company will pay up to $25,000 for any one person injured in the accident, and up to $50,000 total for all persons injured in one crash. 25/50 is the minimum limits required by Virginia law and the minimum you can have, but $25,000 does not go very far in these days of expensive medical care.

The other required coverage is Uninsured Motorist and Underinsured Motorist Coverage (UM/UIM). Your insurance company must provide UM/UIM limits equal to the Liability limits, unless you choose lower UM/UIM limits. That is a terrible idea; you don’t want to do that. UM/UIM Coverage is all that stands between you and possible financial disaster if you or a family member are seriously hurt in a car crash.UM/UIM coverage obligates your company to step in and provide insurance up to your UM/UIM policy limits if the other driver who causes injury has no insurance or has a lower limit than you do. UM/UIM coverage covers every member of your household even if you or another member is hurt as a passenger in someone else’s car.

So look at your UM/UIM coverage. What if you were badly hurt in a crash and couldn’t work for several months? Is the amount of your UM/UIM coverage adequate to compensate you for your injuries and losses? If not, call your agent and ask about increasing the limits. The cost of additional coverage is surprisingly little when you consider the next out of control car may not be insured.