The benefits of having good insurance and high policy limits cannot be overemphasized. When a new client comes into our office to discuss a potential claim, whether it be a personal injury claim or a dispute involving another party, one of the first issues that we discuss is what type of insurance may be available to cover the loss. In some cases, our clients are the ones who have been injured; in other cases, our clients are the ones who are accused of causing damages. In either case, having adequate insurance is essential to either compensate our clients for their loss, or to protect their assets if they are sued.

The primary cases where we see insurance limits having a significant impact involve automobile accidents. While Wisconsin law requires all licensed drivers to have an automobile liability insurance policy in place, those policies must have a minimum limit of only $25,000 for injury or death. If you are struck by an at-fault driver in an accident who has only $25,000 in liability insurance to cover your losses, there is a good chance that your damages will exceed those policy limits. With the cost of medical care, even for injuries that are not life threatening, the medical bills alone can easily exceed the $25,000 limit. Imagine having substantial injuries with several years of treatment, surgeries and medical bills exceeding several hundred thousand dollars, along with lost wages, a permanent disability, and future medical expenses.

To protect yourself from the unfortunate possibility of being struck by a negligent driver with no insurance or low insurance limits, you can purchase high limits of Uninsured Motorist Coverage (UM) and Underinsured Motorist Coverage (UIM). Even though Wisconsin requires all drivers to have auto insurance, many people ignore this and drive with no insurance. You can purchase high limits of UM insurance through your own insurance company, which will help compensate you, your family and other occupants of your vehicle when you are injured by an uninsured motorist or a hit-and-run driver. Purchasing high limits of UM insurance is fairly inexpensive in light of the potential losses you could suffer in an accident.

Additionally, you may also purchase from your insurance company high limits of Underinsured Motorist Coverage (UIM) which provides bodily injury protection to you and the persons in your vehicle if the at-fault driver’s insurance limits are lower than your UIM limits and the at-fault driver’s insurance is not adequate to cover your losses. Again, purchasing high limits of UIM is also fairly inexpensive in light of the substantial losses you could suffer in an automobile accident.

A type of insurance which will assist in protecting your assets if you are at fault in causing an accident is an “umbrella” or “excess” insurance policy. This is a larger policy which provides additional coverage that would be used once your underlying liability limits are exhausted. For example, if you caused a serious automobile accident and the other driver sustains $200,000 in medical bills alone, his or her potential claim against you will be much higher when considering the value of wage loss and pain and suffering damages. If you had only a $100,000 liability insurance limit, which was inadequate to compensate the injured party, the injured party or parties may obtain a judgment against you individually and pursue collection of all of your assets up to the amount of their damages.

While you may have some protection by going through bankruptcy, this is not always the best alternative. To be proactive in protecting your assets in such a situation, you would purchase the excess or umbrella insurance policy which typically provides additional limits of $1 million or $2 million, depending upon what policy you purchase. This extra protection is essential if you cause a serious injury. Additionally, some umbrella or excess insurance policies will also provide you with the additional $1 million or $2 million in benefits for your injuries and may be added to your UM and UIM coverage limits. Check with your insurance agent to make sure that your umbrella policy applies to UM and UIM coverage because many do not. If it does apply, and if the other driver who causes the accident does not have adequate insurance, then you will have a substantial amount of additional insurance available to compensate you for your medical expenses, wage loss, and pain and suffering. Again, the cost of an excess or umbrella policy is relatively inexpensive in light of the protection it can afford you.

It is prudent to check with your insurance agent on the cost for the highest limits you can purchase for all of the above coverages. It is strongly recommended that you purchase as much insurance as you can reasonably afford in order to protect yourself from the unfortunate circumstances described above. This will assist in protecting your assets and to help you recover compensation for substantial medical bills, pain and suffering, loss of wages and possible permanent disability. While no one plans on getting into an accident and being seriously hurt, you can be proactive and protect yourself against other drivers who have no insurance or have minimum liability limits.

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