This is one to share with your clients because the odds are they will be in another crash and they will ask you to represent them again. With the conversations I have had with patients it is rare that anyone has a full understanding of what coverage they have let alone what coverage they may need.
As of July 1, 2020, the required minimum liability coverage for automobile insurance in Arizona will go up from 15/30/10 to 25/50/15. As a personal injury attorney, the increased limits bring with them the possibility of larger settlements along with the probability of greater challenges to get those extra funds delivered.
It has been a long time since $15,000 was adequate to cover someone’s medical bills and compensation for pain and suffering. Raising that limit to $25,000 puts Arizona more in line with most other states. It still falls far short of what it should be. The increase from $30,000 to $50,000 for all parties injured in a crash is still subject to a $25,000 limit per person.
The third number going from $10,000 up to $15,000 is to cover property damage. In most cases where the vehicle can be repaired this number should be adequate. Since there are few vehicles on the road with a market value below either of these thresholds it is not unusual for the adjuster to simply total the car.
Even with the increased limits it is important to carry additional coverage. A few years ago, I was told that 47% of the vehicles on the road in Arizona have minimal or no coverage. Given these odds any one of your clients driving with bare-bones minimum coverage is at risk of taking a financial beating.
A trip to the emergency department with a CT scan to rule out a brain bleed or fracture along with additional testing will usually run up a bill around $10,000. Add to that the care, testing, referrals to specialists, and possible need for future surgery and $25,000 will come up short.
For anyone hoping to get their vehicle repaired for under $15,000 they are at great risk if their vehicle is less than 10 years old. With property damage, any of your clients, especially those driving a vehicle worth more than $15,000 should have collision and comprehensive coverage to ensure that their own insurance will pay for the repairs first and then seek reimbursement from the at fault party’s carrier.
More importantly, with the issue of personal injury, every driver should carry UM/UIM (uninsured motorist/ under insured motorist) coverage. While this creates a new challenge for you as their attorney, it at least offers the possibility that there is additional coverage to protect them from those 47% who drive with minimal or no coverage.
As you know once you have secured policy limits from the at fault drivers’ coverage additional compensation can be collected from your client’s UM/UIM coverage.
For those who own a home and have assets that could be at risk an umbrella policy is the least expensive and probably most effective coverage available. Depending upon their insurance carrier, these policies are typically written at $1,000,000 on policies with liability coverage of $250,000. From your perspective when the responsible party has a $250,000 limit there is considerable probability they also have at $1 million umbrella. With these cases rather than $250,000 the liability limit becomes $1,250,000.
The other thing that should be on your client’s coverage is MedPay. Insurance agents are incentivized to not write this into a policy. Typically, when added it offers $5,000 worth of medical coverage. Unfortunately, agents will tell your clients that they do not need this because their health insurance would cover medical cost.
There are two problems here. First, these days most health insurance policies have a $5,000 deductible which comes out of the patient’s pocket before their health insurance pays a single cent. Five thousand dollars worth of MedPay would cover that deductible expense.
Second, insurance companies cannot recover the first $5,000 of MedPay coverage with subrogation. As such, this leaves an additional $5,000 in the settlement to divide appropriately. The additional cost to your client for this coverage will usually be less than $100 per year. That is less than the typical cost of any healthcare visit.
As Alan King used to tell us, “When you buy a policy from an insurance company you are betting against yourself and hoping the other guy wins.” Given the statistical probability of 1:25 that anyone will be in a crash in any given year, it seems that while you hope you do not need the coverage, chances are that you will. Bill Gallagher
