You Get What You Pay For

The best free, friendly advice I could possibly give you is to purchase “umbrella” coverage as part and parcel of your automobile insurance policy.

If I had a quarter for every time, in
my 38-year career , that there was inadequate insurance coverage to compensate my client as a result of a bad automobile accident, we could all go to Vegas for a month.

In terms of automobile insurance coverage an “umbrella” policy is just that. It is insurance in addition to your already existing auto policy. For instance, if you have a $100k/$300k auto insurance policy (meaning $100k is available per person and $300k is available in the aggregate), you could purchase an umbrella of $1,000,000 that would be available if the underlying policy is insufficient to cover damages.

This additional coverage will cover you, your family, and/or anyone using your vehicle with your permission, whether they are at fault in an accident or a negligence-free victim. Typically, the annual premium for an umbrella policy can be well under $1,000 a year.

The need to obtain such coverage is overwhelming. Most drivers, and I’m saying at least 50% of the users of the public highway, if not more, either have no insurance or the state minimum.

Therefore, one would have to assume, for insurance purposes, that if they or a loved one are made a victim in a car accident, the offending party WILL NOT have sufficient coverage.

The damages in car accidents can include medical bills and lost wages, future medical treatment, therapy, surgeries, and rehab, as well as potentially a lifetime of diminished earning capacity.

The aggregate of these damages can exceed seven figures in a heartbeat.

It is my experience that insurance agents as a matter of common practice do not inform their clients as to the existence of “umbrella” coverage.

Recently, I represented a family whose daughter was severely injured in a car accident. The offending party had minimal coverage. My client was living with her parents and driving her father’s car at the time of the accident.

Her father carried a $100k/$300k policy. Though I valued her case at approximately $2.5 million, tragically, we were limited to her dad’s $100,000 policy.

When I asked her father, a well-educated health care professional, if he had an “umbrella,” he said, “What do you mean…for rain?” In his 25-year-relationship with his insurance agent, the agent NEVER explained to this gentleman, the existence and compelling need for an “umbrella” policy.

I find that to be reprehensible.

Unfortunately, Ohio courts have found that shockingly an insurance agent owes no fiduciary duty to his or her clients. That is utter nonsense. The reason why insurance companies do not explain and recommend “umbrella” policies is because that’s when they have to pay out the big bucks.

Time and time again, I encounter the situation wherein an insurance agent fails to recommend an “umbrella” and consequently, the client is involved in a bad accident and there is not enough coverage to make them whole.

While insurance agents typically do not recommend “umbrella” coverage, they do suggest medical payment provisions. A medical payment provision is an amount of money available, typically $5,000, for payment of medical expenses incurred in an accident.

The caveat, however, is that medical payment provisions can only be accessed if there is no other available medical payment coverage, such as workers’ compensation and/or a person’s own health insurance. In the rare instance that a medical payment provision is accessed, virtually every insurance policy has a subrogation clause that demands that the auto policy be reimbursed dollar for dollar once the claim is resolved.

In essence, people pay a significant amount for medical payment provisions that they are rarely able to use. Instead of paying a premium for medical payment provisions, people would be much better off using those same funds to purchase “umbrella” coverage.

Do yourself a favor, pick up the phone today, and call your insurance agent. Ask about the affordability of “umbrella” coverage for you and your family.

And, when he or she is done giving you a quote, ask them why they never told you about it in the first place.