New Year, New Policy?

January 8, 2014  |  Adriel B. Villarreal

When is the last time you reviewed your insurance policies? Many people purchase their policy when they are young and no longer covered under their parent’s policies or when they first buy a house and never think twice about it. But reviewing your car insurance policy is actually very important. This is a New Year’s resolution that is relatively simple to follow through on and could save you time and money in the unfortunate event that you or a family member is hurt in a car accident.
A few weeks ago I finally decided to compare prices for my auto and home owners’ insurance policies. I was given some motivation to do so after the bombardment of insurance company advertisements during a college football. I guess in some way all the constant advertising caused me to think about my coverage and whether or not I was getting a reasonable rate for coverage. I jumped online and within about one hour I had quotes from several companies promising me the “best coverage” and experience etc. Ultimately, I determined that the effort of switching my auto, home, umbrella and life policies was not worth the marginal savings I was quoted. While I did not learn any earth shattering discoveries during my online searches one thing did stand out that I decided to share with family and friends over the last week or so which is to be very aware of the type and amount/limits of coverage that you currently have. Most insurance companies offer low rates but the coverage limits may not be sufficient for your needs. In other words, you do get what you pay for.
Given that we just started 2014, perhaps this is a good time to review the fine print of your personal policies and the requirements imposed by Minnesota law regarding auto insurance coverage. For most of us, insurance policy issues and concerns will not be thought about until the auto accident occurs. At this point, you are left with the coverage in effect on the day of the accident. Whether you caused the accident or are the victim of the auto accident, the following are a couple of words of advice to protect you and your family:
1. Purchase enough coverage. Your insurance agent will usually be in the best position to recommend coverage/limits, be aware that sticking with “full coverage” auto insurance does not mean best coverage. In Minnesota any person can purchase a “full coverage” auto policy not realizing that they have purchased the most inexpensive policy which will only pay out a maximum of $30,000. This may seem like a reasonable amount of coverage but if a person was seriously injured by your conduct, 30K may leave you in a position where you have to contribute additional money to the victim. These claims are known as “BI” claims referring to “bodily injury.” I typically recommend to my clients that they carry a minimum of $100,000 in liability coverage.
2. Stack…Stack…Stack. If you are injured in an auto accident in Minnesota your initial medical bills will most likely be paid by your own auto insurance company. Don’t be alarmed or upset that your own insurance company has to pay for the bills even though the accident was not your fault. Under the No-Fault Act this is the proper procedure for medical bill payment. Minnesota law requires auto insurance companies to provide the following minimum benefits following an auto/injury accident:
a. $20,000 in medical benefits. This does not mean that you will receive all 20K to pay your medical bills. This simply means that your auto insurer has a cap as to how much it will pay toward your medical bills related to the accident. More often than not, your own insurance company will argue as to whether your medical bills are related to the accident. This can be very frustrating process.
b. $20,000 in wage loss/replacement service benefits. Once again, your insurance company is not going to simply write you a check for 20K for lost wages or replacement services. If you and your doctor sufficiently document that you have lost work/wages due to injuries (disability) caused in the auto accident you may make a claim for wage loss. Additionally, if there are household duties (cleaning, yard work, vacuuming, cooking…) that you are no longer able to perform, due to your injuries, you may claim replacement service benefits until you are able to perform such duties again. The maximum wage loss benefit on a weekly basis, regardless of your income, is $250.00. The maximum weekly replacement services benefit is $200.00.
On first glance, you may think that $40,000 in potential benefits is sufficient. However, this is the minimum amount of coverage you can purchase in Minnesota. For most, it is simply not sufficient coverage if you sustain a serious injury and are out of work for any significant period of time. That is why I encourage all my friends, family and clients to STACK their auto policies. Stacking, in the auto insurance world, means more coverage for a few extra premium dollars. In order to stack you must insure at least two vehicles thus enabling you to “stack” or combine both policies when necessary. Simply put, this means that when an auto accident occurs and if you or a family member sustained a serious injury, you know have $40,000 available in medical coverage and $40,000 in wage loss/replacement services. Your weekly limit also doubles to $500.00 in wage loss.
Stacking is not something that most people have heard about or discussed. Unfortunately, most insurance agents fail to suggest or recommend stacking even though they are required to provide it as an option. The good news is that stacking your policy is relativity inexpensive. I recall that my monthly increase in my policy to stack my vehicles is about $8.00 per month…well worth it. If you are fortunate to have more than two vehicles, you are also allowed to stack. I’ve had clients with 5 auto policies stacked…providing $100,000 in medical benefits if necessary!! If you have never heard of stacking you likely do not have it on your policy. Call your agent and ask about it.
The law that governs auto claims/accidents is known as the Minnesota No-Fault Act. To get a bit more technical the statute is found at Minn. Stat. 65B.01. If you have any questions or concerns about liability coverage and stacking, please do not hesitate to contact one of the personal injury attorneys at Barna Guzy & Steffen.