You can’t drive a car without insurance. Most of us know that, but most of us do not know what our car insurance coverage entails. For many, car insurance is an afterthought. We purchase insurance when we purchase a car, and don’t think about it again until something goes wrong.
As attorneys, we see people who hope they have coverage that will apply to their claims, but seldom do they know for certain. One of the first things we look at is the types of coverage someone has, and the dollar amounts of each type of coverage. If I had a dollar for every time someone said they had “full coverage,” I could have retired a young man. No such thing exists.
My goal, over the next several months, is to talk about car insurance and provide information that will assist with making informed decisions about the types of car insurance you purchase. Let’s start with liability coverage.
Liability is the only coverage mandated by law, without exception. O.C.G.A. § 33-7-11 mandates drivers have at least $25,000 of liability insurance. There is no limit on the amount of liability coverage you can purchase. This coverage protects your personal assets if you cause a wreck injuring someone. When you cause a wreck, you are exposed to two separate types of legal claims: 1) a claim for the property damage you caused; and 2) a claim for the personal injuries you caused. Your liability coverage protects you against both claims.
If you look at the declarations page of your car insurance policy, you will see the amount of liability coverage is broken into two parts: liability — bodily injury; and liability — property damage. Your bodily injury coverage likely has two separate amounts listed, such as $100,000/$300,000. That means you have $100,000 of coverage per claimant (person you injured in the wreck) with an aggregate total of $300,000 of coverage per incident (the maximum amount of coverage regardless of how many people were injured in the same wreck).
Let’s imagine a driver named Flo was driving down I-575, and not paying attention to traffic ahead. She crashes into the rear of a brand new Porsche driven by Gordon Gecko, causing $45,000 in damage to the Porsche. Mr. Gecko contacts Flo’s liability insurance carrier, and learns that Flo only purchased $25,000 of property damage liability insurance. Since that will not cover his repair costs, Mr. Gecko can file a lawsuit against Flo demanding payment of the full $45,000. Once a judgment is entered against Flo for $45,000, her insurance company will pay Mr. Gecko $25,000, and Flo will have to pay the other $20,000 out of her pocket. If she owns a house, Mr. Gecko can place a lien against it; he also can garnish Flo’s wages until his judgment is paid in full. If Flo had purchased $50,000 of liability insurance, she would not have to pay any of Mr. Gecko’s damages out of her own pocket. Her insurance company would have paid it.
Let’s assume now that Mrs. Gecko also was in the car at the time of the accident. Mr. Gecko had only bumps and bruises, but Mrs. Gecko suffered a broken leg. Her medical bills total $60,000. She required surgery and three months of physical therapy. Flo is legally responsible for Mrs. Gecko’s medical bills, and the pain and suffering Mrs. Gecko experienced because of the injury. Flo now faces a claim worth as much as $200,000. Again, because Flo only purchased $25,000 of liability insurance, she will be personally responsible for the additional $175,000.
If you own any assets, it is best to protect them by purchasing as much liability insurance as you can. Saving money on your insurance may cost you much more money in the future.
– By Robert Tidwell