Leonardo Angiulo: The Importance of Understanding Your Auto Insurance Coverage
Monday, December 24, 2012
Let's say you are struck from behind in what's commonly known as a rear-end collision. As you can imagine, there is a presumption that if someone drives into you they are at fault for the accident. It therefore follows that if you suffer any injury or property damage in that accident they will be responsible for those costs.
In Massachusetts, we require all drivers to have automobile liability insurance. The compulsory insurance coverage is only $20,000 per person with a total of $40,000 per accident. This amount may seem significant, but as accidents become more serious, that appearance dissolves quickly. When a policy limit is $20,000 and you are in a hospital bed with fractures waiting for reconstructive surgery, you will have uncompensated damages unless the individual who struck you has some other means of paying.
There are, however, several preventative measures you can take to keep someone else's mistake from having long-term effects on your life. To start, take a look at what is known as your coverage selection page for your automobile liability policy. This page operates as a summary of the agreement between you and your insurance company. The information listed will include things like how much your policy costs as well as what your deductible will be if you cause property damage to your vehicle.
Also on this page is a column marked underinsured auto coverage. This part of your policy kicks in when costs related to an accident exceed the limits of the other party's policy. Let's say you are rear-ended by a large truck with the above referenced 20/40 policy, and let's further say that you suffer a catastrophic injury with significant pain and suffering. If you spend any time in the hospital with rehabilitative care as a follow up we all know the costs of missing work can be very expensive and the cost of quality medical care is more and more expensive every day. Your costs are going to add up quickly.
By holding an auto insurance policy that includes underinsured coverage you may be able to look to your own insurance company for compensation. While there are entire divisions of insurance companies devoted to assessing these claims, it is also possible to litigate the issue should it be necessary.
The underlying issue here is that by paying your insurance company you are entering into a contract. A contract, by definition, is a mutual promise between parties. In this case, you promise to pay, and the insurance company promises to cover certain costs in the event certain occurrences take place. Like any contract, however, you should read it before you sign it.
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