Automobile Insurance

by Neal Dastrup

To gain an understanding of my new calling as the ward Provident Living specialist, I recently read Carolyn Mackay’s newsletter articles, written when she held this position. As you can imagine, I am a little overwhelmed. Unlike Carolyn, I do not have a nursing degree, or any nursing knowledge whatsoever. I have no recipes to share; just some references for good places to go out for dinner. I haven’t a clue as to how to make soap from scratch and my food storage is unscientific. Obviously, I’m in over my head. When Mark Warner dropped in to extend this calling, I told him I was more inclined toward “Opulent Living”, but he didn’t have a church job with that description, so here I am - trying to figure out “Provident Living”...

In all fairness to myself, I might have some knowledge that will be helpful to ward members. I can start by teaching a foundation of financial preparedness: insurance. This will be broken down into four articles - automobile insurance, homeowner’s insurance (including coverage for renters and condominium owners), health insurance and life insurance. These articles will address basic fundamentals and will be written in layman’s terms to make it easy for all to understand. Here goes.

Automobile Insurance

Liability/Bodily Injury: If you are in an accident and it is your fault, you are liable for the claims of the other party. People in the other vehicle are not only entitled to compensation for their “hard losses” (medical bills, etc.), but they are entitled to compensation for lost wages, pain and suffering, diminished capacity, and so forth. In other words, all of those loses you would expect remuneration for if the other party was at fault and ran into you. It is my opinion you are not only legally responsible to “make the other party whole”, but you are also morally responsible. Therefore, you should consider carrying adequate limits, not just the state mandated minimum coverages.

Liability/Property Damage: If you are the liable party in an accident, it is your responsibility to pay for repairs to the vehicle (or other property damaged) to return it to the way it was before the accident occurred.

Personal Injury Protection (No fault medical): Regardless of fault, you and the people in your car need immediate attention if injury occurs in an automobile accident. Instead of waiting for negotiations with the other party, your own policy will pay initial medical expenses. The first $3,000 per person of medical bills are paid from PIP, not from health insurance, so do not get caught in the trap of thinking you can go without PIP because you have a health policy.

Uninsured Motorist: According to 2007 claims data, 8% of Utah’s motorists are uninsured, compared to the national average of 13.8%. One thing I see as being skewed in that statistic is that a much higher percentage of people having accidents seem to be uninsured motorist. The only logic that makes sense to me is that uninsured motorists have a higher incident of accidents than insured motorists. This part of your policy allows your own insurance company to pay the claims you incur if you are injured by an uninsured motorist. You could always sue the other party for damages, but what are your chances? If they do not have insurance, they probably do not have much in the way of other assets either.

Underinsured Motorist: Many motorists carry very limited liability coverage. You can protect yourself by bringing the total amount of coverage to a higher, more realistic amount by carrying adequate limits under the UM portion of your policy.

Underinsured Motorist Property Damage: If you do not carry collision (usually due to the age of a vehicle), you can protect yourself from loss if you sustain damaged to your vehicle by an uninsured motorist. There is usually a small deductible ($250) and a maximum limit of coverage ($3,500).

Collision: This part of your policy pays for repair to your vehicle. You will first pay the deductible and then the insurance company pays the rest, up to the fair market value of your car. There typically is no coverage for damage to the undercarriage from driving off road, so you must gain a knowledge of what damages a policy will and will not insure.

Comprehensive: Often referred to OTC (damage to your car Other Than Collision), you typically have coverage for damage to glass and from fire, theft, vandalism, hitting an animal (or pedestrian), and “Acts of the Devil” (my preferred phraseology). Again, your deductible is applied first and be aware companies do not provide “carte blanche” coverage. You are insured only for events described in your policy.

Towing: You can receive reimbursement (up to policy limits) if you have to be towed for any reason. My daughter’s experience a few years ago at the Sundance Film Festival in Park City does not apply, however. You do not get reimbursed if you are towed for illegal parking.
Rental Car Reimbursement: If you are at fault in an accident, you can receive payment toward a rental car while your vehicle is being repaired, up to the limits specified in your policy.

Are you still awake after all that exciting information? The sad truth is people often will not take time to read and understand their insurance coverage until after they have an accident and need the policy to pay out. At that time, it is too late to get coverage adjusted to proper limits. Sometimes people only want “the cheapest insurance” and they usually are the ones who complain when they are inadequately insured after an accident. Seek proper advice and take time to understand your policy. It is time well spent. Remember: It is not just your legal responsibility to be properly insured, it is also your moral responsibility.