AM I REALLY FULLY COVERED?
Am I Really Fully Covered?
A common misconception of many drivers is that they have “full coverage” insurance.
Many people take comfort in this assuming that if they get into a car wreck, they will be protected financially. Unfortunately, this is often a false sense of comfort, and many people find shortly after a wreck that they are not as fully covered as they think.
In Louisiana, drivers are required to carry minimum policy limits, which are often referred to as 15-30-25.
WHAT DOES 15-30-25 MEAN?
If you have car insurance in Louisiana, you at least have this coverage. The three digits refer to:
Individual Bodily Injury Coverage ($15,000)
Total Bodily Injury Coverage ($30,000)
Property Damage Coverage ($25,000)
That means your policy will pay at most $15,000 to an individual for bodily injury that you cause, $30,000 total for multiple bodily injury claims that you cause, and $25,000 for property damage that you may cause in an accident.
HERE'S AN EXAMPLE…
Say you cause a wreck, and the person you hit is severely injured. Their injuries require an extended hospital stay, which results in significant medical expenses. The person is also unable to work because of the injuries.
Let's assume the hospital and doctor bills total $75,000 and the person loses $25,000 in income because of the accident you caused. The court awards this person $100,000 in bodily injury damage.
But your auto insurance policy only covers $15,000.
That leaves $85,000 the victim is owed that your insurance does not have to pay.
The victim could choose to sue you personally for that excess amount, which could leave you in a lot of debt.
BUT WHAT IF THERE IS MORE THAN ONE PERSON?
Let's say there are two other victims in the vehicle, and for simplicity, let's assume these people have the same injuries and income loss. Again, let's say the court awards them $100,000 total each in bodily injury damage.
Again, your minimum limits policy is only required to pay at most $15,000 to an individual for bodily injury, but $30,000 total for bodily injury claims for the whole accident.
That means the $30,000 will be divided among the three victims. Assuming all of their injuries and lost wages are the same, they would each get a maximum of $10,000 from your insurance company, leaving each injured victim with $90,000 in damages that they could sue you personally for.
DOES THAT INCLUDE THE DAMAGED VEHICLE?
No. The first two numbers of your car insurance policy in Louisiana refer to bodily injury only. Every insured driver is required to carry at least $25,000 in property damage coverage.
Property damage usually relates to the damage to the vehicle itself, but it could also include property inside the vehicle or other property like a fence, building, etc. that you may damage in an accident.
If a crash that you cause results in more than $25,000 in property damage, again, your insurance is only responsible for at most $25,000 of the damage, leaving you responsible for the rest.
If you have been in the market for a vehicle recently, you know that $25,000 would not even cover the cost of most new vehicles today.
In fact, as of January 2018, according to Kelley Blue Book the industry average for “light” new vehicles was $36,270.
So needless to say, it's likely that your $25,000 policy may not cover the damage you cause, which again means that you could be on the hook for it personally.
HOW DO I FIND OUT HOW MUCH CAR INSURANCE COVERAGE I HAVE?
Many people would go straight to their glove box to find out what insurance coverage they have. The proof of insurance card that you are required to carry in your vehicle will most likely not have that information on it.
To find out how much car insurance coverage you actually have, you need to look at the declarations page that is sent to you by your insurance company. If you can't find this document, your insurance agent can send it to you easily.
(See below for a sample declarations page)
I always recommend that drivers buy as much car insurance as they can afford. Minimum coverage policies are really just that – minimum coverage. Having the minimum amount of car insurance required by Louisiana law may leave you at risk for a hefty lawsuit if you cause an accident that exceeds the amount you are covered for. This is especially concerning for people who have a lot of assets like property, investments, businesses, etc.
I also recommend that you spend some time shopping. A good insurance agent will do this for you, but I have found personally that it is worth checking with another agent from time-to-time. You may be surprised to find that your agent may have gotten you great rates initially but has not kept up with finding you the best rate.
The bottom line is this…minimum coverage limits may be “full coverage” as required by law, but they can leave you awfully exposed in the event of a major accident that is your fault.
(If you are concerned about having enough insurance coverage, check out our video on umbrella policies to learn how you can get more coverage for less money.)
This is what your declarations page will look like.
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