Read Your Insurance Policy
It’s boring, long and full of language that requires a law degree to understand. However, it is a good idea to read your insurance policy.
Let me give you an example of an incident that occurred in South Carolina.
A husband and wife, Mr. and Mrs. Murry, purchased a $100,000/$300,000 automobile insurance policy from GEICO. Unfortunately, on September 6, 2006, Mr. and Mrs. Murry were struck by train, and both were instantly killed. The Murry estate requested payment of $100,000 since that was the policy they purchased. However, GEICO took the position that only $15,000 was owed due to “exclusions” in the “liability coverage” part of the contract.
GEICO’s exclusion section stated that there was no coverage in excess of what is required by South Carolina law (which was $15,000) for bodily injury to any relative of the insured residing in the household that is covered.
Now, you know as well as I do, that when you purchase a policy that is $100,000/$300,000 you assume that is the amount of coverage you are entitled to. However, GEICO’s exclusion limited the policy by simply adding language inside the policy (which no one reads) and limited the amount of the coverage. In other words GEICO attempted to lower the “contracted” policy limit of $100,000 to the “statutory minimum policy” of $15,000.
Luckily, almost 8 years later and after years of appeals, the South Carolina Supreme Court in a recent decision (Estate of Edward and Annie Murry v. GEICO, opinion 27435, Filed August 20, 2014) did not like GEICO’s position and found that the reduction attempted by GEICO in violation of Southern Carolina’s public policy. The court stated that although the language was not ambiguous, reducing the stated policy to the statutory minimum is a violation of public policy.
Keep in mind that every state handles their own matters differently, and insurance companies may try to limit policies. Avoid a lengthy 8 year battle, read your policy, and elect an insurance carrier that does not try to limit the “contracted” policy.