Are You Driving On Thin Ice: “Full Coverage” Might Not Be What You Think It Is
At HJVE, we focus on personal injury cases, including automobile collisions. When we speak to someone over the phone or in person about a car wreck they were recently involved in, we always ask them if they have car insurance, what type of coverage, and how much coverage do they have. The majority of people respond by stating, “Oh, I have full coverage.” What we’ve learned over the years is “full coverage” means different things to different people. You may be surprised to learn that there is not an insurance package option that is defined in the law as “full coverage.”
To help bring some clarity to this confusing and complex area of the law, our Louisville car accident attorneys offer answers to questions we get most often about automobile insurance:
1) What types of insurance does Kentucky law require? The only mandatory insurance coverage in Kentucky is bodily injury liability coverage, property damage liability coverage, no-fault/PIP coverage (except no-fault/PIP is optional for motorcycles), and uninsured motorist coverage. Uninsured Motorist may be rejected by you in writing, but all the other coverages are mandatory.
2) How much insurance does Kentucky law require? Pursuant to Kentucky Revised Statute (KRS) 304.39-110(a)(1), Kentucky law mandates that all motor vehicles carry minimum bodily injury liability coverage of $25,000 per person/$50,000 per accident and minimum property damage liability coverage of $10,000 per accident. Also, every automobile policy is to have at least $10,000 in no-fault/PIP coverage, pursuant to KRS 304.39-110(a)(3) and 304.30-020(2). Finally, the minimum required limits for uninsured motorist coverage is $25,000 per person/$50,000 per accident, the same as the minimum requirement for bodily injury liability limits, pursuant to KRS 304.20-202(1).
3)What is full coverage? Too many times clients tell us that they have “full coverage.” However, this usually means that the person only has the minimum required limits in Kentucky for bodily injury liability, property damage liability, uninsured motorist and no-fault/PIP. In our professional experience, you should have high insurance limits for the six types of coverage available: Bodily Injury Liability, Property Damage Liability, Collision, No-Fault/PIP, Uninsured Motorist and Underinsured Motorist. Most insurance companies will allow you to purchase bodily injury liability, uninsured motorist and underinsured motorist coverage of $100,000 per person/$300,000 per accident,$250,000 per person/$500,000 per accident, or a Combined Single Limit policy of $300,000 or $500,000. Additionally, you can also purchase a Bodily Injury Liability Umbrella/Excess policy for $1,000,000, $2,000,000 or higher as long as you own a home. You can also purchase more than the minimum $10,000 in No-Fault/PIP coverage.
4)What should I have on my policy/my family’s policy? Assuming it’s in your budget, we strongly recommend you purchase, at a minimum, the following for your policy:
Bodily Injury Liability $250,000 per person/$500,000 per accident or $100,000 per person/$300,000 per accident
Property Damage Liability $50,000 per accident
Collision $50,000 per accident
No-Fault/PIP $50,000 per vehicle on your policy –don’t let them say, you only need it on one vehicle (although true, the reasons are explained below).
Uninsured Motorist $250,000 per person/$500,000 per accident or $100,000 per person/$300,000 per accident (Also, ask if they will charge a premium for each vehicle on your policy –some companies will do this if you ask – the reason is explained below)
Underinsured Motorist $250,000 per person/$500,000 per accident or $100,000 per person/$300,000 per accident (Also, ask if they will charge a premium for each vehicle on your policy –some companies will do this if you ask –the reason is explained below)
Remember, the above suggested added coverage is very inexpensive in comparison to the additional insurance coverage you gain.
5) What if my agent says I don’t need to purchase additional No-Fault/PIP, Uninsured Motorist and/or Underinsured Motorist coverage? Most insurance agents/companies charge you one premium for each type of insurance coverage you have on your policy. This saves you money, but also saves them money if a claim is ever made. Example: You are injured in an automobile collision, have two vehicles on your policy and have $10,000 in No-Fault/PIP coverage. However, you have medical bills of $30,000, but no health insurance – who pays the additional $20,000 in medical bills? The answer is they remain unpaid and outstanding until you can resolve your personal injury case (assuming you have one). Also, there’s a good chance they will be put into collections.
Had you purchased Added No-Fault/Added PIP/Additional Reparations Benefits of $30,000 per vehicle (as suggested above), then you would have $50,000 in available No-Fault/PIP benefits to cover these expenses as Kentucky law allows you to “stack” the same type of coverage provided you pay separate premiums per vehicle. ($10,000 basic PIP on your car + $20,000 added PIP on your car + $20,000 added PIP on 2nd car listed on the policy = $50,000 in PIP; you can never “stack” the mandatory $10,000 in PIP on the 2nd car –only the amount of Added PIP).
The same goes for Uninsured Motorist and Underinsured Motorist coverage. Same scenario above, but this time the at-fault driver only had minimum Bodily Injury Liability coverage of $25,000 per person, and you have a claim worth $175,000. If you only purchased Underinsured Motorist coverage for one vehicle of $100,000, then you can only recover a total of $125,000 ($25,000 from at-fault driver and $100,000 from your policy). Had you added the same coverage for the 2nd vehicle listed on your policy, and been charged a separate premium for this coverage, then you could have “stacked” these coverages giving you total Underinsured Motorist coverage of $200,000 per person, meaning you would have been able to receive full and fair compensation for your personal injury. The same analysis applies to Uninsured Motorist coverage.
Keep in mind that not all insurance companies will charge you separate premiums on each vehicle insured under the policy for No-Fault/PIP, Uninsured Motorist or Underinsured Motorist, but it’s worth asking.
If you can afford it, then we strongly recommend adding a Bodily Injury Liability Umbrella/Excess coverage of at least $1,000,000 to your policy to protect you and your family if you’re ever involved in a serious crash where you or your family member is at fault. Recently, Kentucky just allowed the purchase of an Underinsured Umbrella/Excess policy of $1,000,000, $2,000,000 or more. This is a very significant change in Kentucky and we strongly recommend adding this to your policy as well.
Obviously, the amount of coverage you purchase for your automobile policy depends on your family budget and what you can afford. But at the same time, we’ve had too many clients come to us for a serious personal injury where the at-fault driver only has $25,000 in coverage and the client decided not to purchase Underinsured Motorist coverage for his/her policy in order to save $20/month. Carrying forward the scenario above, despite that person having a case potentially worth $175,000, all they can recover is $25,000 plus $10,000 in No-Fault/PIP coverage to cover your $30,000 in medical bills.
The bottom line is that it is important to purchase as much insurance as you can, even if it means cutting expenses elsewhere, as there are a lot of uninsured and underinsured automobiles being driven on our roads and highways.
Questions about your automobile accident? We’d be happy to help. Contact our team today for a free case evaluation.