Personal Auto Insurance
When looking at the declaration page of your auto insurance policy, it’s essential to understand what each of the coverages is and the limits you have. Too little coverage, and you could be exposed to a substantial personal loss that you would have to pay from your pocket. That’s why it’s crucial that you buy through an independent agent who will take the time and explain each item so you can make a better decision.
Bodily Injury Liability
Law requires this coverage, and the Oregon State minimum is $25,000/$50,000. What do those numbers mean? If you crash into another car or hit a pedestrian, the insurance company, on your behalf, will pay up to $25,000 to the person you struck. Apart from that limit are expenses, behind the scenes, that don’t draw from that amount. The insurer will, at their cost, provide a legal defense should a civil action be brought against you. But, once they agree that the other party’s injuries exceed $25,000, they will notify you they are no longer providing you that service and that you should seek counsel at your expense. Besides the legal defense, they do all the work to assess the injuries, gather medical reports, investigate the scene, take statements from witnesses and the injured party, and so much more. The $50,000 represents the total amount the car insurance company will pay if more than one person is injured. The $25,000 limit still applies per person.
The big question is: Is $25,000 enough? Have you checked medical expenses lately? $25,000 can get used up in the first hour after you injure someone. Just the ambulance ride alone can be $5,000. Depending on the tests, x-rays, MRIs, and lab tests, the emergency department charges at a hospital can be $10,000 or more. Any surgery to set bone fractures or repair internal soft tissue damage can cost tens of thousands of dollars. Talk to us about how much it costs to increase your limits to $50,000/$100,000 or $100,000/$300,000. You’d be surprised how little your policy would increase, given the possible risk you face of exceeding your limits.
Property Damage Liability
Oregon requires $20,000 of coverage to pay for the property damage you may cause by crashing your car into something else. That could be a fence, ornamental tree, a sign, a power pole, another car, truck, or train, or a house. Any object you damage because you lost control of your vehicle and disobeyed a traffic rule, you will be held liable to reimburse the owner of the property. Is $20,000 enough? What if you total the other guy’s car and he just bought it brand new for $50,000? You can see where I’m going with this. Again, just like Bodily Injury Liability, it doesn’t cost that much extra to increase this limit to $50,000 or $100,000.
Uninsured Motorist Bodily Injury
Say someone hits your car with theirs and runs away. You do not know if they have insurance. Not only is your vehicle damaged, but your arm, neck, and shoulder hurt. The paramedics are careful to pull you out of your car, put you on a stretcher, securing your neck and head because they don’t know how bad your injuries are. Who is going to pay for all of that? The other guy took off. You have no way of making them responsible for your injuries if the cops can’t find them.
That’s why The State of Oregon made this coverage mandatory. You are paying for the coverage the other guy should have bought to cover yourself and the passengers in your car. This coverage also applies to the other driver who sticks around and has no insurance or not enough to cover your injuries.
The minimum limit you are required to purchase is $25,000 for you and another $25,000 per passenger you may have with you. The company will cap out the amount they pay at $50,000 per accident, even if you have four injured passengers in the car with you. Your health insurance would pick up the difference subject to all the copays and deductibles. Again, talk to us about how little more it costs to increase those limits to $50,000 or $100,000. It’s you and your body we are talking about this time, not someone else.
Personal Injury Protection (PIP)
So far, we have talked about the injury or damage you cause to others, or the injury someone causes to you and takes off or has no insurance. Let’s talk about the cost of medical expenses for you or your passengers, regardless of fault. This benefit is paid on top of whatever other coverage may apply. It is often referred to as no-fault insurance. The insurance company won’t care whose fault the accident was. They will pay from the first dollar to the hospital or doctor. It’s a payment guarantee of the initial cost to treat you should you get injured as a driver, passenger, or pedestrian in a car accident. You don’t even have to be in your car. The mandatory minimum Oregon State limit is $15,000. That limit can also be increased.
Uninsured Motorist Property Damage
This coverage is optional, but you must initial the application to reject it. We think it should be mandatory, like the first four items listed above. For so little cost, your car is covered in case someone hits it that doesn’t have insurance or takes off, and you don’t know if they have coverage or not. The limit on this coverage is the value of your car at the time of the accident minus a deductible of either $200 or $300, depending on if you know who hit you. If your car is worth $5,000 and it’s totaled, you’d get $4,700 from your own insurance company if it’s a hit and run or $4,800 if the other guy doesn’t have insurance. If your car isn’t totaled, then the company will pay to repair your car minus the deductible. All this coverage usually costs less than $20 for six months. Cheap!
Other Than Collision
This coverage is optional and is often referred to as ‘Comprehensive Coverage.’ Insurance professionals shy away from using the word ‘comprehensive’ because claimants, in the past, have sued insurance companies for items that were not intended to be coverage simply by convincing a judge and jury that they thought the word meant the company would pay for everything. They failed to read the policy language. So, the insurance industry changed the term used to ‘Other Than Collision.’ Silly, I know, but it happened.
Anything that damages your car other than hitting something while you are behind the wheel falls into this category. Vandalism, theft, windstorm, hail, flood, tree branch, fire, and your four-year-old daughter scratching ‘I love you Daddy’ with a screwdriver in the door are the typical things covered under this policy clause. There are a few exceptions to the ‘hit something while behind the wheel’ rule. If you hit a deer (a moving object not usually in the roadway), the company usually pays that out of Comprehensive. The same goes for any other thing that is in motion that shouldn’t be there, like a falling rock or an office chair that just fell out of the back of a guy’s truck. The object must still be in motion when you hit it to be considered Other than Collision. If the object is stationary, then it would be regarded as at-fault and paid out of Collision.
That doesn’t seem fair, however. Hitting a large boulder in the middle of the road should not be your fault, right? Wrong. If you are keeping your eyes on the road, driving the indicated speed limit, and obeying cautionary signs to slow down around corners, then you should have time enough to react.
This coverage is subject to a deductible of your choosing. $500 is the standard a lender will require. You might go higher if you don’t owe money on your car to say $1,000 or $2,000. That means, after any damage that occurs to your car under this coverage, you would pay out of pocket the deductible and the auto insurance company would pay the rest.
This coverage pays for the damage to your car after you hit something, and it’s your fault. It is also the benefit that will pay for your vehicle if someone crashes into you who doesn’t have insurance but failed to purchase the optional Uninsured Motorist Property Damage. The deductible is typically $500 if you have a finance company, or you may select a higher deductible to save money if you own your car.
Generally, when shopping for insurance, the new company will see a collision claim in the consumer reports and automatically consider it an at-fault incident and charge you more in the quote. But what if you were not at fault and the company paid out of the Collision coverage? Then, you must prove it wasn’t your fault. Some reports will spell out that the other party was at fault, but not all. That’s why we advocate you purchase the Uninsured Motorist Property Damage, so this doesn’t happen.
Other Optional Coverages
Lately, this coverage has been critical. The time to fix a car has risen exponentially. Supply chain issues of car parts, especially electronics, have hampered the body shops’ ability to get autos repaired quickly. Usually, you must have purchased physical damage coverage (Comprehensive and Collision) to be eligible for this option. The company offers limits of $40, $50, or $60 a day with a maximum of 30 days. That used to seem like plenty. Claimants are waiting as much as three to four months to get their car repaired. Use the coverage wisely. If your vehicle is still safe and drivable, drive it until the body shop says they have all the parts in stock. Who cares what the car looks like until then. $50 a day for three months adds up quickly.
Towing or Roadside Assistance
Not all companies offer these options, but be aware that they are not the same. Towing is usually a reimbursement type benefit. If your car breaks down or is in a crash, the company will reimburse you $50 of whatever your tow bill was. So, if it cost you $400 to have your automobile towed from the scene to your home or a body shop, the company will send you a check for $50.
Roadside Assistance coverage means you call the 800 number on your insurance identification card and report a breakdown or accident, and you wait for the contracted tow company to come to get you. Normally, you don’t have to pay for it out of your pocket unless there is a limit of miles stated in your policy, typically 15 miles. So, if your car needs to be towed to a location, say, 40 miles away, then you might have to pay for the extra out of your pocket. All this is negotiated in the dark, on a dangerous highway, in the cold. Other parts to this coverage may include lockout, tire change, fuel, or battery jump. Read the limitation and exclusions carefully before you head out on the highway.
We recommend separate roadside coverage, such as AAA. It usually has few restrictions. Just know that when you sign up with them, they will spam the heck out of you with offers to buy their other products like auto and life insurance. You should keep your roadside coverage separate from your auto insurance because many companies will raise your rate a lot if you use it too much. Three tows or more during a policy period might get your auto policy canceled altogether. Other optional coverages may be available in your auto policy, such as accidental death, providing a benefit of perhaps $10,000.
Your business auto insurance policy declaration page will look very similar to what was described above in the Personal Auto Insurance section. The differences will primarily be the types of vehicles and drivers allowed on the policy. Vehicles over a certain weight, like one-ton or above, must go on a commercial policy regardless of their use. Limits of Bodily Injury Liability can go much higher to meet specific contractual needs. You may include your personal automobiles on a commercial policy, but not the other way around. Personal Injury Protection coverage is available only on cars that would qualify for a personal auto policy. For trucks exceeding that limit, medical coverage is optionally available. It is assumed that you and your employees would be covered by Workers Compensation Insurance should any of you be injured in an accident during work hours and in a company vehicle. There would be no need for PIP coverage.
Optional Coverages and Certificates
Cargo, non-owned and hired autos, and trailers are a few of the additional items that may be added to your policy. Accessories you add to a vehicle are included in the physical damage portion of each one. It will show a split between the value of the auto and additional equipment. If you buy a stock truck, then add accessories later, don’t forget to update the policy with your agent.
Often, a government agency or a contract will call for a certificate to be issued. It is a form that guarantees your policy meets specific liability limit requirements for the length of the job.
Your bed, furniture, clothing, kitchen utensils, computers, phones, and television are all covered under the property damage section. You set the limit of how much you think all your stuff is worth. The minimum is usually set at $20,000. If you think you can buy everything new, not used, for $20,000, then select that amount. It’s a good idea to go through your apartment or rented house and inventory how much things cost brand new. Should you have a fire, the company will not make you buy used items from a thrift store or online barter website.
Too many renters don’t value this coverage. Yes, your personal property is essential for daily convenience, but imagine if you lost all that and your savings and future income because you got sued by your neighbor and landlord after you burned down their unit. Your renters insurance covers your negligent acts, like leaving an unattended pot on the stove or a bathtub filling with water that floods the space below you. If you have children who cause damage or injury to others at home, on the playground, or at school, you could be held liable as a parent. The insurance company would provide a defense and pay for any damages or injury you might be legally responsible to pay. The standard limit is $100,000, but like auto insurance, consider a higher amount for a little extra.
Loss of Use
This section covers the extra cost of having to live somewhere else after your abode becomes uninhabitable due to a covered loss, like a fire. Renting another apartment or staying in a hotel while they fix your apartment could get very expensive. Plus, just because you had a fire in your unit doesn’t release you from having to pay the rent. This coverage is usually a percentage (maybe 40%) of the amount of personal property coverage. If you have $30,000 personal property, you’d have $12,000 in loss of use. You don’t get that $12,000 all at once. The company would give you $1,000 a month for twelve months. If you can move back into your apartment in six months, you’d get $6,000. Is $1,000 a month enough to pay your extra expenses? If not, maybe consider purchasing more.
Your renters policy may allow for an increase of limits on certain items like computers and jewelry. Typical policies have limits on these high-dollar items, and you must pay a little extra if you enjoy higher valued things like these and want them sufficiently covered.
Motorcycle and ATV Insurance
The limits and coverages are like the Personal Auto Insurance described above. The fundamental difference you notice is the lack of Personal Injury Protection. It’s not available on motorcycle policies. You may purchase optional medical coverage, but it’s expensive. Often, we recommend you buy medical only if you don’t have health insurance. You can add optional coverage for your bike to cover accessories like saddlebags. Modern motorcycle policies also offer insurance for riding gear and helmets.
Again, the Bodily Injury and Property Damage Liability Insurance described in Personal Auto Insurance applies to boat insurance but is modified for damage or injury you cause while on the water instead of driving on the road. You will notice that physical damage coverage splits up the value of the boat and each motor. Optional coverage is available for trailers, accessories, and personal effects that you carry onboard.
Motor Home and Travel Trailer Insurance
The same Personal Auto Insurance coverages apply while driving a motor home. The stated value of the vehicle defines the physical damage portion. You can add or increase the limit for your personal property carried inside the RV. Of course, travel trailers have no motor, so the liability is extended from the vehicle towing the unit. However, you do need to insure the travel trailer and its contents for physical damage and theft.