Insurance Solutions Owner, Mike Reynolds – Guest Blogger for Law Firm Regarding Insurance Requirements
As attorneys who deal with insurance companies daily, we’re often asked, “How much coverage do I need?” In our experience, many people don’t fully understand the coverage they have. We interviewed Mike Reynolds, owner of Insurance Solutions, Inc. for expert advice from an independent agency.
“Alabama requires all operators of automobiles and other vehicles to have liability insurance or face a civil penalty. The first offense is typically a fine of $500 and the second is $1000 and loss of driving privileges for up to six months. In Alabama, the law only requires what’s typically called 25/50/25 coverage. And that’s not enough coverage to protect you if you accidentally hurt someone.,” says Reynolds.
We asked Mike the following questions to get a better understanding of what types of coverage pay and under what circumstances they pay:
Q. What is liability coverage?
A. Liability coverage pays for injury to others or damage to their vehicle. It does NOT pay you. The three figures listed on policies mean:
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- A. 25,000 Bodily Injury
- B. 50,000 Per Accident Total
- C. 25,000 Property Damage (Vehicle or Other Property)
Q. Why isn’t the Alabama state requirement enough coverage?
A. Most cars today cost upwards of $25,000. Let’s say you accidentally run a stop sign and hit a late-model luxury SUV. The car you hit is a total loss. Your insurance would pay $25,000. But the car is worth $40,000.00. You could be responsible for the $15,000.00 the insurance company doesn’t pay. I had a client who fell asleep while driving. He and a passenger had serious injuries and were airlifted to the nearest hospital. The cost of that alone would be close to $50,000.00 in most cases. A policy with higher limits would have been far less costly.
Q. Many people drive illegally and don’t have insurance. What happens if someone without insurance causes an accident?
A. Uninsured and underinsured policies are available to protect you. In fact, these policies cover your medical expenses, compensation for being hurt, lost wages and emotional distress. As Ralph points out in the accompanying video, you can stack this coverage.
Q. Can you explain when comprehensive and collision coverage will come into play?
A. Comprehensive insurance covers things like fire, theft, hail, and wind damage to your vehicle. A deductible is paid by the insured and then the insurance pays the rest of the damage.
Collision insurance pays for damage to your car if you are at fault. If the other driver is at fault and their insurance company doesn’t pay in a timely manner, your collision coverage will pay, and your insurance company will pursue collecting from the other person’s insurance company. If you have paid a deductible, you will be reimbursed for the deductible when the other person’s insurance company pays.
Q. What is the most often misunderstood insurance situation?
A. Many people think they can let someone else drive their car and their insurance will pay for any accident that occurs. Most people don’t realize if you live in the same household and you allow a family member to drive your vehicle, they must be specifically listed as a driver on the policy. Every adult living in the home needs their own policy and should list other members of the household as drivers if they are going to be using your vehicle.
There’s one thing every accident has in common according to our attorneys. No one wakes up expecting to be involved in an accident. No one expects to be seriously injured in an accident. And we represent people every day who are hurt in automobile accidents. We encourage you to consult with an experienced, professional insurance agent who will explain what coverage you need and why it applies to you. If you would like to speak with Mike Reynolds, his contact information is listed on his website.