It is important for individuals to understand the benefits and limits of their insurance coverage for their automobile.  After representing individuals for many years in personal injury cases and even discussing insurance coverage with relatives and friends, I have concluded that many of us do not understand how the insurance they maintain on their automobiles may or may not protect them.  A common response I receive from clients when inquiring about their policy and their policy limits, is that they know they have “full coverage”. 

 

Most individuals apply for automobile insurance through their agent and by default, the agents produce a policy for coverage for $25,000.00/$50,000.00, which is the minimum limits to be insured.  First, the policy will only pay out a maximum of $25,000.00 for individual loss and increases to the maximum protection of $50,000.00 if more than one individual suffers injury or loss.

 

However, individuals do not understand that the right to recovery from the insurance company is limited to the policy terms and this limits your protection.  For instance, if you and your family members are injured in a car accident which you may be deemed your fault, the maximum payout is $50,000.00 for all of your medical needs, lost wages, and to compensate for pain and suffering.  The coverage is not “full” and unlimited, and may not even meet the costs of your family's medical needs.  Although your medical insurance provider may initially pay these expenses, they are entitled to reimbursement for said expenses under the theory of “subrogation” wherein you are required to repay the medical insurance provider.

What actually may be a greater risk is suppose you are hit by another driver and you and/or your family members are injured, and the driver only has policy limits at a maximum of $50,000.00, you will only be able to recover the benefits of the other driver's policy.  If the other driver is at fault and has no insurance, you will only be able to recover the limits based upon your policy from the insurance provider.  Then, you are only left to try to collect personally from the driver who is at fault.

 

So, it is important you understand the exact amounts of your coverage on your automobile policy.  What a lot of people learn when they contact their agent is that to increase the coverage and protection for your family, the cost of the premiums of your policy only increases slightly.

The last point you should keep in mind, is that in the state of Tennessee, an individual may “stack” their policy limits.  So, if you and your family members are in an accident and injured, and the other driver has policy limits of $25,000.00/$50,000.00, but your automobile policy has greater limits for example, in the sum of $50,000.00/$100,000.00, you can take advantage of the additional coverage you maintain on your own automobile policy and to protect your family.  In that scenario, you would be able to recover the benefits of the other driver's policy in the sum of $50,000.00, in addition to taking the difference in the other driver's coverage and your coverage, which would mean an additional $50,000.00 could be paid out from your policy to cover the expenses associated with the injury.

 

The amount you are entitled to is based upon the damages incurred as a result of the injury, including medical bill and lost wages, but the policy limits effect the amount you may recover from the insurance company.  It is imperative that you call our office to discuss your claim prior to negotiating a settlement on your own.  However, you can also help protect yourself and family by considering increasing your policy limits on your automobile insurance policy.