Volume 16, Number 4 · October 2006

Clients Should Re-Examine Insurance Coverage

by Roger J. Ecker

Recent experience with several of our valued clients again points out that many of our clients are underinsured. Whichever insurance company they have their policies with, our clients need to meet with their insurance sales representatives or brokers and review their coverages.

A prominent sales representative of a well known insurance company here in Washington, Pennsylvania, with the unique background as a former insurance claims representative, points out that in terms of underinsured motorist and uninsured motorist coverages, one can increase the limits from $100,000.00 to $200,000.00... and from $200,000.00 to $500,000.00... or even from $500,000.00 to $1,000.000.00 for only a few dollars more per year in premiums. This UM/ UIM insurance coverage cannot exceed the liability coverage which the policy holder has to protect himself or herself against claims of others.

Underinsurance can occur in a number of other policy provisions. One of the more obvious shortcomings may be in the coverage provided by your own policy for income loss protection, which should match your net monthly income. Also, medical coverage needs to be adequate, particularly in view of the fact that other health insurance coverage today is being reduced for many people. Both income protection and medical coverage can be raised to adequate amounts for literally a few dollars per year. This protection to the policy holder is well worth it.

A final area of concern is a choice of either the "full tort coverage" or "limited tort" coverage to save a few dollars. Our advice to all our clients is that before selecting "limited tort coverage" they discuss fully with their agent or broker the benefits and coverage they will sacrifice by failing to choose "full tort coverage".

This full tort coverage affects the coverage provided by a "third party" or the other negligent driver should you have an accident claim. Even though the "limited tort" coverage may on its face save a few insurance premium dollars, the corresponding loss in coverage is never worth the few dollars saved for insurance premiums. The option you choose on your policy dictates the coverage that you can claim from the policy of the other driver, or third party negligent driver who caused the accident. If you were to choose "limited tort" coverage under your own policy, then you and your family would give up important rights to be paid or reimbursed for pain and suffering and other non-economic losses, unless you "fortuitously" happened to be the victim of a drunk driver, or suffer a "catastrophic personal injury" such as the loss of a significant body function, permanent disfigurement or death.

This is the reason we advise our clients that the few dollars saved by electing "limited tort" coverage is never worth it, and in the long run, could prove to be very expensive if you suffer an injury in an accident and have given up the right to be paid for pain and suffering.

All of our clients should consider these four simple policy upgrades with your own insurance agent:

increasing your liability and UIM/UM coverage;
increasing your "income loss protection";
increasing your medical coverage protection; and
always electing to purchase "full tort" coverage.

Never give up such important rights by choosing "limited tort" coverage to save a few dollars.

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