There are many different ways we would use automobile insurance in an automobile case. First, if your car is damaged in an accident, if you have coverage of your own vehicle under your policy, you can turn to your own insurance you get your car fixed. A lot of people ask why the other guy doesn’t pay for the car to get fixed. Sometimes you don’t know right away what type of coverage the other driver has (if any) and you need your car fixed immediately. Or maybe the other person doesn’t have as much coverage as you need to fix or pay out on your vehicle. You’ll want to make sure that your own auto coverage is at least sufficient to pay for replacing your own vehicle. If you have a $30,000 car, you need at least $30,000 in property damage coverage of your own to cover that. Also, if you have rental car coverage on your insurance, you might need to use it while your car is getting fixed or while you’re looking for a new car.
Medical Payments Coverage
Let’s say you’re injured in an accident, and you get a bill for a large deductible for emergency room. If you have medical payments coverage, which is money you can use to pay medical bills and expenses resulting out of an accident whether it’s your fault or someone else’s, you can use that money to help pay for your deductible, copay, and other out of pocket expenses. If you have a high deductible health insurance plan or your plan has significant copays, you want to make sure your medical payments coverage is at least enough to cover that — preferably for your whole family, so you don’t find yourself paying co-pays and deductibles while you’re trying to recover from a car accident.
Uninsured and Underinsured Coverage
The next step is finding out if the person who hit you has enough liability coverage and if s/he does, you will pursue their liability policy. That policy covers the wrong-doer’s actions.
But if the other driver doesn’t have enough coverage, there are two situations. One is, the driver is uninsured, meaning no coverage whatsoever. This is where your uninsured motorist coverage comes into play. Essentially, that coverage pays for the same damages you could claim against the other driver. This includes necessary and related medical expenses, pain and suffering, your loss of work — all of those claims you would make if the other driver carried insurance.
The other situation is when the driver who hits you simply doesn’t have enough insurance. The mandatory minimum amount of insurance in Wisconsin is $25,000 which sounds like a lot but really isn’t enough, given how expensive some medical care can be especially if it involves hospitalization. Once the $25,000 is run through, your own insurance kicks in and goes beyond that.
You can see that there is coverage that you carry that protects other people (liability) and there’s coverage that you carry that protects you. Uninsured and underinsured motorist are among the most important.
People have a tendency to want to scrimp or save on uninsured and underinsured motorist coverage. It is technically “optional” coverage, but it really isn’t optional, because it protects you. Think about what would happen to you if you couldn’t work for a year. Are you carrying enough uninsured and underinsured motorist coverage to protect yourself? That’s what people forget when they shop with only the price in mind.
Q: Does underinsured and uninsured coverage protect me? And are there other instances when I’m not driving, but I’m hit by a motorist?
Uninsured and underinsured coverage is broader than many people realize. For example, if you were a pedestrian in a crosswalk and you’ve been struck by a car, your uninsured and underinsured motorist coverage can cover you in that situation. If you are in the back seat of an Uber vehicle or a friend’s vehicle and you get hit by somebody without enough insurance coverage, your uninsured and underinsured motorist coverage can protect you there as well. If your college-aged child is on your auto insurance, and they are in a friend’s car, they would be covered under your uninsured/underinsured motorists coverage if they are in an accident. It can really be of tremendous importance in situations that are not immediately apparent. If somebody runs you off the road and seriously hurts you and they don’t have insurance, your uninsured motorist coverage covers you.
Q: I need to collect on my underinsured or uninsured coverage, does the insurance company try to collect some of that from the uninsured or underinsured defendant?
Sometimes yes sometimes no. In Wisconsin, you are required to notify your underinsured carrier if the underinsured motorist wants to settle with you for the limits of their policy. You insurance company then must decide between two choices to do two things. One, they can tell you to go ahead and take the offered amount and release the defendant driver. Two, your insurance company can elect to “substitute funds.” In that situation, instead of the underinsured motorist giving you the money and having you sign a release that eliminates any additional responsibility for the defendant driver, your insurance company pays you what the defendant driver was offering, and retains the right to sue that driver for more money. It is fairly unusual for insurance companies to substitute funds, although it can happen. But the law requires that you give them the notice and an opportunity to do that. The good news is, if they choose to do that, you are not really much of a player in their litigation against the defendant driver, and you are still able to proceed after your own uninsured motorist benefit regardless of that situation.