Part II – Legal Topics Relating to Vehicle Accidents
In part two of our discussion relating to vehicle accidents, we will explore important insurance topics. Please note I am not an insurance salesperson, adjuster, or insurance executive so my article seeks to provide an unbiased overview of insurance topics. No insurance parties were harmed in the making of this article.
Nearly every state requires liability insurance. According to Wikipedia, only two states have relaxed liability insurance requirements. Those include Mississippi where citizens can opt out through the posting of cash or a bond equivalent and New Hampshire where its citizens rely upon personal responsibility only (pistols at dawn anyone?). Like most states, Missouri requires its vehicle owners and drivers to obtain two (2) types of insurance coverage: (1) liability; and (2) uninsured motorist. Those of you who have registered a vehicle or renewed your license plates may recall having to show proof of such insurance.
Liability insurance is also referred to as third-party coverage because it is for the benefit of a third party who is not a party to your insurance contract. Stated another way, liability insurance covers bodily injuries and property damage to others caused by you. In most instances, the property you damage will be another vehicle, but this type of insurance can also cover damage to public and private property such as road signs, bridges or buildings, up to the limits written into your policy. Currently, our state laws require 25/50/10 coverage. The 25/50 refers to liability insurance for bodily injuries of $25,000 per person or $50,000 per accident regardless of how many people are involved and the 10 refers to $10,000 for property damage per accident regardless of how many vehicles are involved. For example, if you have a 25/50 liability policy, and three (3) people are injured, and their claims are worth $10,000 each, your insurance company will likely pay out $30,000 on these claims once liability is determined. However, if each of the three (3) injured parties has damages of $20,000, your insurer will only pay a maximum of $50,000 leaving you with a potential liability of $10,000. If in that same accident, you cause $20,000 in property damage, your liability increases by an additional $10,000.
In most cases, if you are a driver who causes or contributes to an accident in which your passengers are injured, you will be liable for all or some portion of their damages; therefore, if you regularly participate as the driver in a car-pooling arrangement, I encourage you to consider limits exceeding state requirements (e.g., $100,000 per person and $300,000 accident with medical payment coverage of at least $25,000 per person). If your car-pooling arrangement involves accepting money for fuel or maintenance, I encourage you to speak with your insurer to make certain your conduct will not affect your coverage.
Missouri laws also require uninsured motorist coverage of $25,000 for bodily injury per person and $50,000 for bodily injury per accident. According to Wikipedia, only three states currently allow relaxed uninsured insurance requirements (Mississippi – bond or cash payment; New Hampshire – personal responsibility only; and Virginia – offers uninsured motor vehicle fee). Uninsured motorist coverage protects you in the event that you are involved in an accident with an uninsured driver but it provides no protection for property damage. Each year thousands of Missouri citizens are involved in automobile accidents with drivers who did not maintain state required automobile insurance. According to the Insurance Research Council (2011 Edition), your chances are one-in-seven (approximately 14%) that your vehicle accident will involve someone without insurance. Most experts predict the percentage of uninsured motorists will not improve soon. According to the Missouri Highway Patrol, over 20,000 drivers were ticketed in 2010 for failure to produce proof of insurance. Although this number includes drivers who were merely unable to produce proof of insurance, the number did steadily increase about 6% annually from 2008 through 2010. To encourage all drivers to have insurance coverage, the Missouri Automobile Insurance Plan was created pursuant to Sections 303.200 and 379.460 R.S.MO. to provide automobile insurance to those successful applicants who are unable to obtain coverage in the marketplace.
Many informed drivers feel they need insurance protection beyond the basic liability insurance coverage required by law such as medical payment insurance; comprehensive insurance; and collision insurance.
Medical payment insurance pays for your own medical costs up to the limit you contracted your insurer to pay. If you have significant health insurance already, perhaps you feel this additional coverage is not a priority; however, some policies pay the amount not covered by your other policies such as health or accident insurance. Many of these policies also cover you or your family when you are a passenger or when you are a pedestrian struck by another driver. Still others provide coverage to passengers in your vehicle and funeral expenses arising from a vehicle accident.
Comprehensive insurance pays for damages to your own vehicle. In addition to damages arising from a collision, such policies often cover risks such as fire, theft, explosion, windstorm, hail, vandalism, glass breakage, birds and animals. If you have this type of insurance, check your policy for details as only those risks listed in detail in your policy are covered.
Collision insurance covers damage caused by the collision of your car, regardless of who is responsible. This type of insurance usually includes a deductible and most companies will not sell it without comprehensive coverage. You pay the deductible amount when you have an accident, and the insurance company pays the rest, within the limits of the policy. Some experts suggest you should include comprehensive and collision insurance if you own a late model or expensive vehicle to protect your investment. If your vehicle is financed by a lending institution, the lender may already require comprehensive and collision insurance to protect its interest in the asset.
In summary, vehicle insurance is important. Most states require minimum insurance requirements. If you do not have insurance, anything you own, including your home, savings, future earnings and other assets may be used to reimburse an injured party for their losses. If you are a high-risk driver and unable to find an insurance provider in the marketplace, Missouri’s Automobile Insurance Plan was created for you. For information, contact (888) 706-6100 or explore the Missouri Automobile Insurance Plan at www.aipso.com.