Choosing the right auto insurance coverage can be downright overwhelming. It is a very daunting and frustrating task to predict what may or may not ever come to pass. Afterall, no one wants to imagine themselves being in a car accident. Furthermore, no one wants to pay high monthly premiums for something they may never need especially not for a complete stranger. However, what most drivers do not understand is that their auto insurance coverage is built to protect them and their loved ones not just the other driver. You simply have to know what to look for and assume the other driver will not have enough in policy limits to cover your damages. When choosing your auto insurance coverage, you should consider the following:
- Uninsured Motorist Coverage (UM)
- Underinsured Motorist Coverage (UIM)
- Med Pay Coverage
- Car Rental
- Umbrella Policy
First of all, it should be pointed out that the minimum limits of coverage in Iowa are $20,000/person or $40,000/accident. What this means is – if you are in an accident and there is one person injured, the most they may receive from the other driver’s insurance company would be $20,000. If there is more than one person injured in the other vehicle, all of those individuals would split $40,000. Obviously, these minimum limits are ridiculously low. If there are other assets available against the party who is responsible, they could be pursued. This rarely happens since people tend to have the amount of coverage they can afford. Thus, lower limits mean less assets available.
A good personal injury lawyer would highly recommend you consider a minimum of $100,000/person and $300,000 in multiple injuries coverage. Of course, this all depends on what your financial assets are. If you have a lot of assets, you should certainly consider a lot more insurance. This protects from someone going after you personally when your insurance policy limits have been exhausted.
An umbrella policy is a higher amount of insurance coverage. It is called an Umbrella Policy, because you have certain minimum limits as required by the Umbrella Policy carrier, which come into play if the lower limits have been exhausted. If the primary insurance has minimum limits of $250,000 and $500,000, their coverage only comes into play for anything over $250,000 to the limits of coverage. Generally, Umbrella Policies start at a minimum of $1,000,000. They are very inexpensive. First dollar (primary) insurance coverage is the most expensive. As you get higher limits, the cost goes down. This is because there is a lower probability you are going to get into a catastrophic car accident.
If you are driving a company vehicle, insurance coverage goes with that vehicle. In fact, coverage begins with the owner of any vehicle involved in an accident. Then, the driver’s insurance coverage comes into play. After that, it would go to uninsured or underinsured motorist coverage from your own policy.
Uninsured Motorist Coverage (UM)
There is a form of insurance coverage, which is as or more important than the primary coverage discussed above. This other insurance is UM or Uninsured Motorist coverage. This is coverage to protect you. If someone causes an accident and they do not have insurance, they are called an uninsured motorist. Your Uninsured Motorist coverage steps in to provide payment for bodily injuries as if the other driver had such coverage. When this type of insurance is involved, you are on the other side of your own insurance company. In other words, your own insurance company will treat you like you are the other driver because you are making a claim against them.
Underinsured Motorist Coverage (UIM)
If the other driver does not have enough insurance to cover your damages, your UIM or Underinsured Motorist coverage comes into play. This is coverage to make up the difference between the amount of the other driver’s inadequate insurance and what your damages are actually valued at.
Both UM and UIM coverage are critical, because they provide you with protection should the other driver not have insurance at all or inadequate coverage to make you whole. In Iowa, you have to sign a statement specifically refusing this coverage if you do not want it. However, it is strongly recommended you consider having UM and UIM coverage limits as high as possible.
Med Pay Coverage
Another type of insurance is called Med Pay or Medical Payments coverage. This coverage is available regardless of fault. It pays medical bills up to whatever coverage limits you have. A lot of people have $5,000 in Medical Payments coverage. This means, if you do not have health insurance for instance, your medical providers from the accident can receive up $5,000 in reimbursement for their cost of care. Med Pay can be used for co-pays, deductibles, etc., so that you are not injured and also facing the wrath of medical creditors. A good personal injury attorney would always suggest the highest limits of medical payments coverage you can afford. It can really make a difference when you are dealing with an abundance of medical bills.
Another type of coverage is for car rental reimbursement. If you are in an accident and have downtime in which your vehicle is not available, your car rental coverage will provide a replacement vehicle for a certain number of days or up to a certain dollar amount. This is not unlimited as to how long you can use a rental car. You should make sure what the time/monetary limitation is. Often, the other driver’s insurance has car rental coverage as well. Get a clear answer from either your or the other driver’s insurance company as to the terms and limitations on car rental coverage.
Choosing Your Insurance Company/Agent
You should always have an insurance agent you can trust, as they are very important in making sure you get the right kind of coverage. There are many different companies out there offering insurance policies, from the traditional face-to-face with an agent to the evermore common online insurance coverage. There does not seem to be a big difference in service or outcomes. It simply comes down to what you are comfortable with. When choosing your insurance company, take your time and do your research. There are several options to consider as to what works best for you and your family.
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