Sometimes there are actually advantages of lower insurance third party limits!
One of the most important factors in every injury claim, is that there is enough insurance to pay for all damages. One of the ways for people to ensure that they have enough insurance to pay for any injuries, wage loss or future damages they may suffer in an accident is to buy their own uninsured or under-insured motorist coverage.
Uninsured Motorist coverage protects the injured party if the at fault party did not have insurance.
Under-insured Motorist coverage kicks in if the at fault party does not have enough insurance. Let’s say an injury has a value of $100,000. If the at fault party has only $15,000/$30,000 coverage, then $15,000 would be collected from that party’s insurance and the other $85,000 from the injured party’s Under-insured Motorist coverage.
I have long suggested that everyone have at least a $100,000/$300,000 Under-insured Motorist Coverage.
If a family is making over $85,000 yearly, I suggest a minimum of $300,000/$500,000 Under-insured Motorist coverage.
If a family is making over $120,000 yearly, I suggest a $300,000/$500,00 Under-insured Motorist policy with a 1 Million Dollar or more Personal Umbrella.
A personal umbrella is NOT what most insurance agents sell. They sell normal umbrella policies.
The difference is that a personal umbrella covers you if you or your family is hurt by an uninsured/under-insured driver. An ordinary umbrella policy only protects you if you are at fault and someone is suing you.
So, hopefully everyone has or will obtain a reasonably sized UM or UIM policy above.
If you have one, it is sometimes beneficial to have a small policy on the at fault driver.
Let’s say your bills from an accident are $20,000 and the other driver has only a $15,000/$30,000 minimal policy.
Whoever paid the medical bills, whether an HMO or a PPO will want to be repaid (and usually have a right to be repaid) out of the third party settlement.
The attorney representing you in this case will talk to the HMO or PPO and let them know there is only $15,000 available in third party insurance available , and typically the HMO or PPO will agree
to take around 1/3 or $5,000 on their $20,000 bill. They understand that if there’s only $15,000 total available, there simply is no advantage to the patient/client pursuing the policy unless
they reduce their bills substantially.
On the other hand, if the at fault party had a larger policy, say $100,000/$300,000, the HMO or PPO would not reduce their bills nearly as much.
Nonetheless, an experienced attorney can help negotiate bills down even in these circumstances.
I’m Ed Smith, a Sacramento Uninsured Motorist attorney since 1982. Call me anytime in Sacramento at 916-921-6400 or 800-404-5400 for free, friendly advice.