When you purchase an insurance policy, it will have limits to the amount that can be claimed against it for any given accident. Understanding you policy limits will help you to make a wise decision on how to fully protect yourself in case you are involved in an accident.

The first thing in trying to understand your policy is you really have 3 or 4 separate coverages. Collision covers your car or other cars you may have damaged. Liability covers any person you may have hurt. Uninsured Motorist (UM) and Under-insured Motorist (UIM) covers you for your injuries should someone hurt you in an accident. Some states also have a medical benefit insurance often called PIP or medpay. This helps pays for medical bills and wage loss immediately after the accident while liability is being sorted out.

So what do all the numbers next to the policy mean? You know, the 25/50. The first number, the 25, is the maximum amount that a single individual can obtain from your policy. That means any one individual can only receive $25,000 from your insurance policy for a single accident. The 50 is the global maximum amount that your policy will pay out for any single accident. If 4 people are hurt in the accident, $50,000 is the maximum that your insurance will pay between all 4 persons with not one single individual receiving more than $25,000.

It’s now time to buy an insurance policy. Remember to buy enough UM/UIM because you can’t trust other people to purchase enough of their own insurance. Your liability limits will then have to be greater than or equal to the UM/UIM coverage as you cannot insure yourself more than the general public. A good rule of thumb is a 100/300 coverage across the board. This covers almost all types of accidents you may be involved in. If you have a lot of assets, purchase even more. Just remember, the state minimum requirements are often not enough if you are hurt in a serious accident.

It just so happens that I found this article that sums up winter driving quite nicely. From the article:

If you do not have to drive in a snowstorm, then don’t. Stay home or take public transportation. Winter driving conditions can be very dangerous and unpredictable.

One other piece of advice, if you see an accident on a busy road or highway and conditions are still slippery, wait for the police or ambulance to give assistance. A woman was killed in Salt Lake City when she got out of her car to assist another injured person when a truck lost control on the slippery roads and slammed into her. Be careful out there.

1. Report the accident immediately to the police. They will conduct an initial investigation that should include accident reconstruction, documenting evidence, and the interviewing of witnesses.
2. Record the names and contact information of all witnesses to the accident before they leave the scene and take pictures of the accident. This will help ensure the full value of your insurance claim.
3. If you experience any pain at all, go directly to the hospital or doctor.
4. If you are seriously injured, wait for paramedics to arrive to examine you.
5. Notify your insurance company as soon as you are able. But remember, never begin the settlement negotiation process until you are fully recovered.

Case Study

Gender: Male

Age: 30’s

Type of accident: Male gets t-boned while driving through an intersection

At-fault insurance company: State Farm and Allstate

Type of medical care: Chiropractic, Shoulder surgery, and rehab

Length of treatment: 6 months total

Settlement amount: His total money offer (medical bills and pain and suffering) was 1.28 times the total medical bills.

Example: $39,000 in medical bills times 1.28 equals a $50,000 total money settlement from State Farm and Allstate.

Things to note: Policy limits can really hamper the amount you receive in your settlement. This is particularly true when you have a serious injury or surgery. In this case, this male should have easily received $70,000 or more due to the seriousness of his injury. However, the person that hit him only had $25,000 liability coverage and he only carried $25,000 in UIM (under insured motorist) coverage. Because that was the limits to the insurance coverage available, he was stuck receiving less than the actual value of the claim. This is why we recommend protecting yourself by buying enough coverage.

Now that you have a shiny new camera phone, what should you be taking pictures of? Everything! Don’t let the other person move their car until you get lots of pictures of the damage, the accident scene, bruising, cuts and bleeding, weather conditions, traffic conditions, or just about anything else you can think of. The more pictures the better so don’t be timid in documenting the accident.

The reason you want to take your own pictures is because you can’t rely on the insurance companies to document your accident fairly. For example, you may be driving a pickup that has a trailer hitch. If the person that hit you was driving a compact car like a Honda Civic, their car may be totaled out, but your truck may have little to no damage at all. Does this mean that the impact was not severe enough to injury you? Of course not. However, the adjuster may try and make that very argument with you. The problem you will face if you did not gather your own pictures, will be trying to overcome this argument if you do not have your own evidence. Do you really think the adjuster will just give you his pictures of their totaled out car? Don’t count on it.

Injuries are another important thing to document with pictures. If you have bruises, they will eventually heal and how will the adjuster know how severe they were if you didn’t take pictures of them. Scars fade over time, so take pictures along the way to show how long you had to live with the scar before it finally faded. Did you have blood all over your face? A jury would surely love to see those graphic pictures when trying to assign value to your claim.

If you are the one person in the United States that does not have a cell phone with a camera, please at least buy a disposable camera and stash it in your glove compartment. Eye witnesses are good to have, but pictures never lie.

When you are upside down in a car and you try to sell it, you have to come up with the difference owed versus the difference you received at the time of sale. This same concept applies to a car accident. If you owe more on the car than what it is worth at the time of the car crash, you have to come up with the difference. This could be a few hundred dollars, but all too often with newer cars, it could mean thousands of dollars. So how do you protect yourself from paying thousands of dollars out of your own pocket for an accident that wasn’t your fault? GAP insurance.

GAP insurance is usually under $500 to purchase. You can even buy GAP insurance later on after owning the vehicle for a little while. The whole idea behind GAP insurance is when you total your car and the value of your car is worth less than you owe on the vehicle, GAP insurance steps in and pays the difference for you so you don’t have any expenses out of pocket. Heres the math:

The amount you still owe on the car at the time of accident: $20,000

The amount the insurance company pays you as fair market value: $18,000

The amount you still owe after the insurance company pays you: $2,000

So instead of you having to pay the difference of $2,000, GAP insurance steps in and pays the $2,000 for you.

If you’re constantly one that buys new cars and is always upside down in your loan, GAP insurance is for you. For more information on GAP insurance, visit this site.

Even though it’s the law to have auto insurance, some people choose to ignore the law and not carry any insurance. Even if they do have insurance, that does not mean they have enough insurance to cover all your medical bills if you are severely injured in an accident. When purchasing insurance it’s important to protect your assets and yourself.

When trying to protect your assets, you want to make sure to carry enough liability insurance. This is the money your insurance company pays if you are at fault for the accident. Most states set the minimum at $25,000. Even if you have less than $25,000 in assets, its always wise to purchase more than the state minimum in liability coverage. A good rule of thumb is carry at least $100,000 per individual, $300,000 per accident in liability insurance (often referred as a 100/300 policy). This should be enough to cover 99% of all accidents you may be involved in.

When trying to protect yourself, make sure to purchase enough Under Insured Motorist (UIM) and Uninsured Motorist (UM). UIM protects you from someone that didn’t carry enough insurance. UM protects you from someone that didn’t have any insurance at all. Carry enough in both of these coverages to ensure you are not stuck paying medical bills because someone didn’t have enough insurance or didn’t have any insurance at all. The great thing about UIM/UM is that both are super cheap to add to your policy. I recommend at least $100,000/$300,000 in both UIM and UM coverage.

Tip: When shopping for insurance, some agents will try to cut out or minimize UIM/UM to “save” you a few dollars in an attempt to gain your business. Do not fall into this trap. This is the cheapest and most important insurance to carry on your own policy.