By law, Wisconsin drivers are required to have car insurance, but do you really understand your policy and exactly what it covers in the event of a car accident?
Car insurance policies can be confusing, with pages and pages of information that you may not fully understand. The majority of insurance policies are all written with the same major sections, but some specific provisions and exclusions can have significantly different results when applied to the exact same accident.
The three most important provisions in your car insurance policy to understand are liability, medical payments and uninsured and underinsured coverage. Take a look below as we review these important sections in detail.
What is Liability Insurance Coverage?
Liability insurance covers you when you are at fault and cause an accident that hurts someone. This could be a passenger in your own vehicle, occupants of another vehicle, or even a fire hydrant owned by the city. It covers you when you would be held legally responsible to someone else, and it requires a demonstration of negligence or fault.
There are almost always exclusions to coverage, such as, but not limited to:
- When you are carrying persons or property for a charge. (Related article: what delivery drivers need to know)
- Incidents intentionally caused by an insured.
- When any vehicles are involved in a prearranged or organized race, speed demonstration, or stunting activity.
The coverage extends, again with some minor exceptions, to you and members of your household, for whatever vehicle you are driving. The policy also extends coverage to listed vehicles. That means that if you loan your car to a neighbor or relative, your liability insurance covers them if they cause an injury.
What is Medical Payment Coverage?
This covers the occupants of a vehicle, and the insureds under a policy if they are in need of medical care after an accident in someone else’s car. This is not a fault based coverage. It is available regardless of who is at fault.
Medical payment coverage is for medical treatment only, may be limited to treatment needed within one or two years of the accident, and also has a relatively low limit, sometimes as low as $1,000 per person (but it can go up to $10,000 per person). It can sometimes be increased based on whether an insured was wearing their safety belt and shoulder harness.
This is one of the coverages that has an exclusion for delivering persons or property for a charge. Read more about the dangers of delivery driving, here.
Understanding Health Insurance Versus Med Pay
When you are injured in an accident and require medical attention, some medical clinics, physical therapy clinics and chiropractic providers may insist that you pay your bills right away using Med Pay.
- It is important that you understand the differences between your own health insurance and Med Pay before you pay your bills.
- Health insurance has no limit, Med Pay only covers to a certain point and then you may be stuck to cover the remaining outstanding balance out-of-pocket.
- Health insurance has deductibles and co pays, and that is what the auto medical payments should be used for. You should not be paying for additional medical costs on your own, you should let it go through health insurance first, to see what may be covered.
Some clinics and chiropractors get paid less if you go through your health insurance, which is why they encourage you to choose Med Pay instead. But again, if you exceed your Med Pay coverage, you will be required to pay the bills yourself.
The take home point: nobody should be billing medical payments except the injured party, and that should be only for deductibles and co-payments.
Uninsured Motorist Coverage
A part of any car insurance policy is uninsured motorist coverage. Current Wisconsin law requires all car insurance policies issued in Wisconsin to carry coverage of at least $25,000 per person, with a total limit, if more than one person is injured in a single accident, of $50,000.
This applies when an at-fault driver does not have liability coverage either on himself, or on the car that he is driving. For example, a driver using a friends car may not have his own car insurance, but would normally be covered under the vehicle owner’s insurance. Or if a person is covered under his own policy, he would still be covered under his own policy when driving a friend’s car that is not insured. Car insurance policies, when they are issued, typically cover a named insured and members of the insured’s household, and also cover vehicles that are listed in the policy, as long as they are being driven with permission.
This coverage is typically for injury or death only, it does not include damage to your vehicle or its contents. When a policy says it covers injury, it really refers to medical services and incidental out of pocket losses, wage loss, and pain, suffering and disability.
When a claim is made for uninsured motorist benefit and paid, the insurance company then owns a claim and can pursue the uninsured driver to recover from him. The insurance company can take steps to have the drivers license and registration revoked from the uninsured driver.
This is also where someone who is struck by a delivery driver who does not have the correct insurance can recover. If an insurance company for the other driver denies coverage due to an exclusion, for example, for delivering people or property for compensation, your uninsured motorist would kick in.
This uninsured motorist covers you if you are injured by a vehicle driven by an uninsured driver, regardless of your status. You could be a pedestrian struck by a car, on a bike struck by a car, or a skateboard or pogo stick. You do not have to be driving, but you need to be struck by an uninsured motorist driving a vehicle.
A hit and run driver that is not identified is considered an uninsured motorist.
In fact, a miss and run driver, someone who you swerve to successfully avoid and then run into a ditch or a light pole, can be considered an uninsured driver under certain circumstances.
Here are some tips to help you successfully put forth an uninsured motorist claim when the driver is not identifiable:
- First, the incident needs to be reported to the police within 72 hours.
- Second, the facts of the accident are corroborated by competent evidence that is provided by someone other than the insured or any other person who makes a claim against the uninsured motorist coverage
- Third, within 30 days after the accident occurs, the insured or someone on behalf of the insured files with the insurer a statement under oath that the insured or a legal representative of the insured has a cause of action arising out of the accident for damages against a person whose identity is not ascertainable and setting forth the facts in support of the statement. This 30 day requirement is not generally known by the public and your claim will likely be rejected if you do not fit this timeline.
What is Underinsured Motorist Coverage?
This is coverage that applies when you are injured by a negligent driver who has inadequate insurance to cover your losses. Your own insurance company steps into the shoes of the negligent driver and compensates you to the same extent as if the negligent driver had adequate coverage.
If your policy says you have $100,000 in coverage, don’t be mislead into believing you can ever collect $100,000. That is just the starting point, before reductions allowed by law and incorporated to the policy kick in. In this hypothetical scenario, where the declarations page lists $100,000 in coverage, that amount would be reduced by any amount received from the insurance company for the at-fault driver, and further reduced by any amounts paid or payable under any worker’s compensation law, and further by any amounts paid or payable under any disability benefits laws. So the $100,000 policy limit in our example may be reduced to zero, if there are other benefits that apply.
These reducing clauses, which apply in both uninsured and underinsured motorist benefit cases, make having an umbrella policy with the appropriate endorsements very important.
Most umbrella policies do not include uninsured and underinsured motorist benefits, but they must be purchased separately and added by an endorsement. This is a very inexpensive endorsement, but one that is seemingly not explained very well by many captive insurance agencies. That is why I strongly recommend at least talking to an insurance agency who deals with many different insurers. Those agencies are the ones that are qualified and able to discuss these options with you.
Questions about your recent car accident? Let us help you now.
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