Don Speaks Candidly about Auto Insurance, Part II Don Speaks Candidly about Auto Insurance, Part II Transcripts:
DK: So say you're in a car accident and you have coverage, and you get sued, but you're covered up to the amount of the policy. But then you say to yourself, what if I'm in an accident, and the person who I sue doesn't have sufficient coverage? Am I going to chase their personal assets? That's hard to do, and then you find yourself in a very unpopular position, the person has personal assets, you don't want to hurt them, they didn't try to hurt you. So how can you protect yourself? Well, you can buy what's called supplementary under-insured motorist coverage. Everyone carries a minimum amount of what they call SUM coverage. But it's the additional SUM that you can purchase, up to the same amount of your policy. So let's say you're in a bad auto accident and your coverage is $500,000 single limit. The driver of the other vehicle has a 25/50 policy. If you have that SUM, you can make a claim against your own company, which is litigated - it's not litigated in court, it's resolved in arbitration. So if you have that additional supplementary under-insured motorist coverage, you can then recover against your own company for the difference between the $25,000 policy that the driver had and the $500,000 that you had. So, in a sense you've now protected yourself as well as you've protected everyone else.
Interviewer: With that supplemental insurance there's a risk that after the accident your premium's going to appreciate drastically, or is there some level of forgiveness the insurance companies look at?
DK: Well, the insurance companies are only going to raise your premium (I shouldn't say this because I don't work for an insurance company) but from my experience, they're only going to raise your premium if you have the accident marked against you - and furthermore if they increase your premium, go find another insurance company. If they find the accident was your fault, then they may raise your premium. But if you bring an SUM claim, the presumption is that it wasn't your fault, you're the one who's injured, and you're bringing the lawsuit. There's another thing that I always think is interesting about SUM. People come in and they have $300,000 single limit policy, or 100 and 300 policy - that's $100,000 per person and $300,000 per occurrence - and then they have the basic minimum SUM coverage, which is $25,000. I say to them, you know you just insured the rest of the world far better than you've insured yourself. If somebody else sues you, they can recover up to $300,000, whatever the extent of your policy is. But you, if you're in that same accident, and you're suing them, you've only got coverage for up to $25,000. So get the extra SUM, protect yourself.
Interviewer: So I guess the rule is, be sure you talk to your agent -
Interviewer: -before signing a bottom line and make you understand all the nuances.
DK: That's it. I always encourage somebody to talk to an agent. I'm not being paid here to promote any independent insurance agent. It's just that you're getting professional advice.
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