Sometimes, there are actually advantages of lower insurance third-party limits!
One of the most critical 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 underinsured motorist coverage.
Uninsured Motorist coverage protects the injured party if the at-fault party does not have insurance.
Under-insured Motorist coverage kicks in if the at-fault party lacks 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 everyone have at least a $100,000/$300,000 Under-insured Motorist Coverage.
If a family makes over $85,000 yearly, I suggest a minimum of $300,000/$500,000 Under-insured Motorist coverage.
If a family makes 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 regular umbrella policies.
The difference is that a personal umbrella covers you if you or your family is hurt by an uninsured/underinsured 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, having a small policy on the at-fault driver is sometimes beneficial.
Here’s why.
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, 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 a $15,000 total available, the patient/client is simply no advantage in pursuing the policy unless
they reduce their bills substantially.
On the other hand, if the at-fault party had a more extensive 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 even in these circumstances.
I’m Ed Smith, and I’ve been a Sacramento Uninsured Motorist attorney since 1982. Call me anytime in Sacramento at 916-921-6400 or 800-404-5400 for free, friendly advice.
Find out more about my firm by reading reviews on Yelp or Avvo.