In the past, we have reminded you of the importance of doing a “check-up” on your insurance coverage to make sure you are sufficiently covered, either if you or someone covered by your policy (family member or friend) inadvertently causes injury to others, or someone else causes harm to you or your family member and is either uninsured or underinsured. Recently, I had an opportunity to sit down with a client who sustained a serious injury and the other driver had only $25,000.00 in coverage and our client had “the standard policy” of 100/300 in both bodily injury and uninsured/underinsured coverage. This means that there will only be an additional $75,000.00 in coverage from his underinsured policy to meet the damages (medical bills, lost earnings in his business, and the losses in function and in pain he has and will continue to sustain as a result of the injuries). Illinois, and most insurers who write policies in Illinois, does not provide for “stacking” policies on top of one another: the underinsured policy will only cover the additional damages to the maximum coverage limit after applying the underlying policy limits of the other driver. It brought to mind that perhaps this topic deserves mention again in our blog.
If you have the same coverage limits that have been considered “standard” for the past forty years or so, you are woefully underinsured. Those policies typically provide for coverage in the amount of $100,000.00 per person and $300,000.00 per incident, meaning that one person individually can recover a maximum of $100K and the combined limits, regardless of the total number of persons hurt in the occurrence, is $300K. A serious or life threating motor vehicle collision that results in an inpatient hospitalization in a trauma center will eat up $100K in the first couple of days, including air transport and the ICU stay and scans/tests. These limits are simply not enough. You cannot rely on the at fault/other driver’s policy to cover these expenses. You should seriously consider obtaining what is known an “umbrella policy”, which is a means of providing excess coverage for you expenses and damages when the responsible party does not have sufficient coverage.
Another advantage to an umbrella policy is that it affords you some protection in the event that someone else is injured as a result of some negligent act or omission on your part or your family or others operating your vehicle. These policies can also cover actions against you as a result of a fall or injury on your property. Your personal assets can be subject to attachment of any judgment in the event that someone obtains a judgment against you in excess of your insurance coverage available, so it is certainly important that you consider umbrella coverag for this as well.
The cost of annual premiums for an umbrella policy, which should be at a coverage limit of at least $1 million if available through your insurance company, is well worth the expense and should be looked at as an investment in your protection and in the protection of your family. Contact your agent and sit down with her or him to do an audit of your existing coverage. Make sure you do not fall into the category of clients we are frequently interacting with who tell us “I meant to do that and never got around to it”. This process of evaluating and monitoring your insurance coverage is every bit as important as updating your estate plan. Do not push it off to the side on the list of things you have been meaning to do. When you find that you do need it, it may be too late.