However, determining whether you are adequately insured first requires a basic understanding of what is contained in your insurance policies and where you can locate critical information about your coverages. While your complete insurance policy contains many pages of conditions, exclusions and endorsements, many of which are written such that they are difficult to understand, the first place you should look in your policy is the declarations pages. The declarations pages consist of the first few pages of your policy which identify the specific automobile and homeowner’s coverages and the amounts of coverage. Not all policies are the same for each individual, as you need to specifically pay premiums for each of the different components of coverage. The primary categories of coverage that you typically will find in your insurance policy include the following:
Automobile Insurance Coverages
- Bodily Injury Liability – Identifies how much coverage you have if you are responsible for causing injuries to someone else in an automobile collision.
- Property Damage Liability – Identifies how much coverage you have if you are responsible for causing property damage to someone else in an automobile collision.
- Medical Payment Coverage – Identifies the amount of coverage you have for injuries to you or your passengers in your vehicle sustained in an accident, regardless of who is at fault. This amount is usually $10,000.00 or less.
- Comprehensive Insurance – Identifies coverage that helps pay to replace or repair your vehicle if it is stolen or damaged in an incident that does not involve a collision. This would include damage from fire, vandalism, or trees or hail falling on the vehicle.
- Collision Coverage – Identifies the coverage to help pay to repair or replace your car if it is damaged in an accident with another vehicle or object.
- Uninsured Motorist Coverage – Identifies how much coverage you have for bodily injuries you sustain in an accident as a result of the negligence of a driver who has no insurance.
- Underinsured Motorist Coverage – Identifies how much coverage you have for injuries you sustain if you are struck by a negligent driver who has some insurance but inadequate amounts of insurance.
Homeowner’s Insurance Coverages
- Dwelling Coverage – Identifies the amount of coverage for your actual home in the event you sustain damages due to a fire or weather event.
- Personal Injury Liability – Identifies the amount of coverage you have if someone is injured on your property due to your negligence.
- Personal Property Coverage – Identifies the amount of coverage you have for the actual contents of personal belongings in your home, such as furniture, appliances, etc. Your declarations page will also tell you whether or not you have replacement cost or actual cash value Replacement cost coverage is better because then you can recover the amount it actually costs to replace the items that are damaged or lost. Actual cash value only provides you with that amount of damages you sustained based upon the depreciated value of those items you lost. For example, if you paid $1,000.00 for a couch that is now 20 years old, the actual cash value amount may be extremely low, such as $50.00. However, if you had replacement cost coverage, you would be able to replace that $1,000.00 couch with a new one and you would receive the full amount for that replacement couch. Replacement cost coverage does cost more in premium amount; however, as you can see, it is much better coverage.
Umbrella Endorsement Coverage
Umbrella endorsement coverage is extremely important and can apply to both automobile and homeowner’s coverages. This is perhaps the most important coverage you can purchase. For approximately $200.00 to $250.00 per year, you can add an additional $1 million or more of coverage to the following:
- Automobile liability limits if you are at fault in an automobile collision;
- Uninsured and underinsured motorist coverage if someone injures you in an automobile collision; and
- Homeowner’s liability limits if you are negligent and someone is injured on your property.
In order to obtain an umbrella policy that covers all of the above, you need to specifically request this from your insurance agent. Many companies will only sell policies that simply provide a liability umbrella policy which would add another million dollars in coverage to your liability coverage for home and auto. However, it is extremely valuable to have the additional protection for your automobile, uninsured and underinsured motorist coverage, as well. That is what you will need to specifically request when you speak with your insurance agent. This would help protect you and provide additional benefits if you or others in your vehicle are injured in an automobile collision caused by someone who is either uninsured or underinsured.
If you are injured in an automobile collision or sustain significant property damage to your home or its contents, it is important for you to consult with an attorney to assist you in obtaining fair and reasonable compensation for your losses and to utilize your insurance coverage to the fullest extent. You should review your declarations pages with your insurance agent and discuss whether or not there is a need to increase your insurance coverages. Simply because an agent says that you have “full coverage” does not mean that you have enough insurance to cover the typical losses that our law firm sees on a daily basis.