Everyone knows that lawyers don’t sell insurance. So, when a lawyer recommends a particular type of coverage, you know it’s not to make a sale. Knowing your options for liability insurance coverage can save the day financially, and save you some legal troubles too.
Buy More than Minimum Limits for Vehicle Coverage: This is not a place to try to save a few bucks. North Carolina minimum limits coverage for vehicle policies is only $30,000. If you cause a wreck and the other person has to have major surgery, that alone can cost more than $30,000. Then the other driver has a right to sue you personally, and you’ll have to pay your own lawyer to defend you (since insurance doesn’t have to pay for your lawyer after they pay their limits). Even if you don’t own a lot of property, you might not want to lose what you have, and you don’t want an expensive legal bill. Coverage that is a step or two above minimum limits is usually not that much more expensive, and is well worth it.
Uninsured/Underinsured Motorist Coverage (UM/UIM for short): Always choose this coverage on your vehicle policy. It protects you and your family. If you are in a wreck caused by another driver, your damages may be more than the other driver’s coverage. Suppose you have medical bills, lost income, and pain and suffering of $100,000. Suppose the other driver has a $30,000 policy, and that insurance company pays it to you. You are still $70,000 short, and the other driver may not own enough property to bother going after. If you have a $100,000 policy and you purchased UM/UIM coverage, your insurance company will pay you the other $70,000. It’s even more important when the person who hit you had no insurance at all. UM/UIM coverage is inexpensive, and helps you protect yourself. Be aware that you cannot buy UM/UIM coverage when you buy only a minimum limits policy, since it isn’t available on those policies. That’s another reason it is best to buy a policy with limits higher than the minimum.
Umbrella Policies: If you have enough assets to be worth protecting, consider a personal umbrella policy (PLUP for short). It increases all of your personal liability insurance coverage (home and vehicle) for any risk covered under the policies to $1 million. (They can be purchased for more, but most people choose $1 million.) The real beauty is that coverage is often only about $200 per year, which is a modest expense for something that gives you so much more protection. If you own property that is worth more than your current insurance coverage, even if you aren’t a Rockefeller, you should consider a PLUP. Businesses can have umbrella coverage too, called a commercial umbrella policy (CLUP) that raises any liability coverage on existing policies (premises liability insurance, fire insurance, company vehicle insurance, etc.) to $1 million or whatever other higher amount you choose.
When a client sees me about an injury, fire, theft, or other casualty, one of the first things I do is to see what insurance coverage is available from which policies. If you make good insurance choices that give you the most “bang” for your “premium buck,” you’ll be better protected financially and can save legal bills for things that otherwise would not be covered by your policies.
Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough, NC. She can be reached at 919-732-7300 or firstname.lastname@example.org.
This article was last updated in January 2020.