News & Updates from Hodge & Langley

Understanding Car Insurance

Written by Charles J. Hodge on June 5th 2017.

If you’re ever in a car accident, the first thing the police, lawyers and other drivers will ask you is, “Do you have insurance?” You shouldn’t be driving a car without some basic insurance (driving uninsured is illegal), but just because you have some insurance doesn’t mean you are covered against anything and everything that can happen behind the wheel. This blog will help you understand the types of insurance out there and what they will or won’t cover if you’ve had an accident.

1. Liability Insurance (or “Liability/Bodily Injury Coverage”)

This insurance is extremely important to carry. If you cause an accident, this insurance will pay for the people you harm. So if you hit John and Melinda Smith, your insurance will cover their hospital bills (up to your coverage amount) and will pay for a lawyer if the Smiths sue you. The coverage you have is listed in two amounts, like “$50,000/$100,000.” The first number is the maximum amount your insurance will cover per person, and the second is the maximum amount it will cover for the entire accident. So if John has a broken arm and Melinda needs stitches, you likely won’t have to pay out of pocket, as their total injury cost is within your coverage amount. But if one of them ends up in a coma for months, or if they had three children in the back seat who all need extensive surgeries, you may not be fully covered for their total injuries.

2. Liability Coverage for Property Damage

This type of liability insurance covers you if your car causes damage to property, which may happen if you dent another car or run over the neighbor’s mailbox. Your insurance company will investigate the damage and pay the owner what it deems is fair (up to your coverage limit). (Note, this coverage does not apply if you damage property on purpose).

3. Uninsured/Underinsured Motorist Coverage

Insurance is harder to get and more expensive if you’re a bad driver with a history of speeding tickets or accidents. Thus, some of the worst drivers on the road have some of the worst insurance, because they can’t afford to cover their own bad records. Therefore, it’s really important to have uninsured/underinsured motorist coverage to protect you from the people most likely to be involved in accidents.

Upset woman checks insurance options after car accidentSouth Carolina requires you to carry at least $25,000 in insurance to cover yourself if an uninsured driver hits you. However, there is no minimum requirement for under insured motorist coverage.  Many times the worst drivers have minimum limits policies, and in today’s medical world, $25,000 can quickly drain away to cover an ambulance ride, ER visit, CAT scans and more – not to mention larger injuries, medications, physical therapy or lost wages. So it’s VERY IMPORTANT to get more than the minimum for this important coverage, particularly given that it is relatively inexpensive compared to the value it can provide. Specifically, underinsurance coverage costs on average about $50 more than basic uninsured motorist coverage. It adds additional insurance on top of what the other driver carries. Let’s explain with an example:

Let’s say Sam gets a lower spinal fracture when a 21-year-old driver sails through an intersection and sideswipes his car. Over the next year, Sam undergoes two surgeries and months of difficult physical therapy. In the process, he loses his job. His case, in total, costs over $300,000. The other driver – the one who caused the accident -- only had $25,000 in insurance coverage (the minimum in South Carolina), holds a minimum wage job, and doesn’t own his house or car. If Sam did not elect to purchase underinsured motorist coverage, then he’d be paying tens of thousands of dollars of his own money for injuries caused by someone else. The young driver who hit him, who has no assets, is essentially judgment-proof (a court can’t fine him money he doesn’t have) so there is nothing more than the $25,000 policy available to help Sam, which does not even cover the medical bills. However, if Sam were to carry three $250,000 uninsured motorist policies (which can be stacked up), he has $775,000 in available coverage. Sam’s purchase of underinsured motorist coverage has protected him from potentially life-long bills or bankruptcy.

4. Collision Coverage

Collision Coverage protects you against accidents you cause – by either hitting other vehicles or property. This insurance helps pay for repairs needed after collisions made by you or other drivers you allow to use your car. You can choose the amount you want to pay based on the deductible. You pay less per month if you keep a high deductible, but this means you’ll have to pay more out-of-pocket when you need repairs.

5.Comprehensive Loss Coverage

This is a catch-all type of insurance to pay for car repairs if other types of damage occur, like hail, flooding, a tree falling, or even your car being stolen. This type of insurance is likely only worth paying for if you have a newer model car or one that is worth a lot of money.

6. Medical Payments Coverage (or “Med Pay”)

This is a great type of insurance that not everyone knows to ask for. It pays for your medical bills, and those of other passengers in the car, regardless of who caused the accident. Paying the low monthly amount for $5,000 in coverage can make a big difference in your future if you have an accident.

How much insurance should I buy?

While it’s impossible to give general advice to all people (as your income, the type of car you drive, and the type of driver you are will all impact your needs), we can make some general recommendations. First, understand the minimum insurance requirements in South Carolina:

  • $25,000 for bodily injury or death per person.
  • $50,000 total for bodily injury or death per accident.
  • $25,000 for property damage.

In South Carolina, you also must have the following minimum uninsured motorist coverage:

  • $25,000 for property damage.
  • $25,000 for bodily injury or death per person.
  • $50,000 for bodily injury or death per accident.

It’s rarely a good idea to just have the minimum when it comes to insurance. We generally recommend that you carry liability insurance (combined bodily harm and property) of $100,000/$300,000. Your uninsured/underinsured motorist coverage should match the same amount as your liability coverage – so that should also be $100,000+.

We recommend purchasing one or two additional uninsured/underinsured policies, and carrying Med Pay of $5,000. Your collision coverage amount is up to you and how much you can handle paying out-of-pocket if you have a car wreck (if you can access $2,500 easily, then set your deductible at that and pay less per month; but if you’re barely making it through each month, you may need to pay for a little more insurance to help quickly cover any needed repairs).  And if your car is over 10 years old, don’t bother with comprehensive loss coverage. Again – these are our generalized recommendations; your financial situation, employment, and medical history affect your individual insurance needs. 

If you’ve been involved in an accident and need to discuss your insurance case with a lawyer, contact Hodge & Langley Law Firm today

Posted in Motor Vehicle Accidents