The Problem With “Full Coverage” Insurance

Car CrashIf you are in an serious automobile accident, have suffered personal injury, and you are transported by ambulance to the hospital, you will soon find yourself facing extremely large medical bills. A hospital visit can run thousands of dollars.

As a personal injury attorney, I cannot stress enough the importance of having uninsured and underinsured coverage.

However, insurance companies generally do not make it a habit to explain their insurance coverage. Many times I ask a client if he or she has uninsured and/or underinsured coverage, only to get the following response: “I have full coverage.

“Full coverage” generally refers to having liability insurance (which protects other people from your bad driving) plus coverage for the vehicle (regardless of who is at fault). “Full coverage does not protect you if you are rear-ended by an uninsured motorist. You can pay your deductible and fix your car, but you will not receive funds to pay your medical expenses or pain/ suffering from the collision.

Additionally, even if the at-fault driver had insurance, if there are multiple passengers, there may not be enough funds to cover all the claimants involved if the at-fault driver had a 15/30 policy limit. Again a 15/30 liability policy means that the insurance will pay a maximum of $15,000 to one claimant and a maximum of $30,000 to all claimants.

Let me give you an example based upon a true story (names have been change to protect the identity of those involved). Rosa bought 2003 Toyota Sequoia and made sure she had “full coverage.” She had no medical insurance through her employment. On a cool Saturday morning, she decided to drive to the store. As she was driving, all of a sudden, a 1992 Honda made an unsafe movement and struck a 2012 Jetta which in turn was propelled into Rosa’s Sequoia. All vehicles sustained major damage.

The passengers in the at-fault vehicle (1992 Honda) were both injured and transported to UMC trauma center via ambulance. The driver of the Jetta was also transported by ambulance to Saint Rose Hospital. Rosa was not transported but was likewise injured. In the weeks that followed, Rosa sought medical attention for her neck, shoulder and back pain.

The 1992 Honda (at-fault) had the minimum coverage policy of 15/30. Thus, the most the Honda’s insurance is obligated to pay any one claimant is $15,0000 OR $30,000 to all claimants.

There were 4 claimants total in the auto accident. That is, two (2) passengers in the at-fault vehicle, the driver of the Jetta (1) and Rosa (1). Total medical expenses for all four (4) claimants was over $90,000.

The auto insurance offered the policy limit of $30,000. However, the medical expenses alone were three times as much as the policy limit. Thus, each person was receiving only approximately 1/ 3 of their medical expense.

Rosa paid her deductible and fixed her vehicle. However, she was now stuck with 2/3 of her medical expenses. She could have elected not to accept the 1/3 offer and sue the driver directly, however, it did not appear the driver had any assets. Thus, Rosa would have incurred additional fees and costs attaining a judgment with little or no hope of recovery.

Luckily, I was able to assist Rosa in asking the medical providers to provide reductions. The medical providers in this case were generous enough to work with Rosa so that she did not get stuck with huge medical expenses. However, such generosity is not always provided.

Rosa thought she had protected herself when she asked for “full coverage” but soon realized that the “full” coverage she attained did not “fully” cover her.

Rosa has now attained medical payment coverage ($5,000) and also UM/UIM coverage. Now she has better protection for herself. She has $5,000 to cover her medical expenses regardless of who is at fault, and she also has UM/UIM in the event she gets hit by a vehicle with no insurance or a limited insurance (as was her case). Rosa told me that what surprised her the most was that her insurance rate did not increase that much after adding the additional coverage.

The moral of the story: GET MEDPAY. GET UM/UIM. Protect yourself, not just your car.