Are You Adequately Protected?

By Casey Johnson

At Aitken*Aitken*Cohn, we regularly get to meet the greatest people under the worst circumstances—after serious injuries or the death of a loved one.

While our profession necessarily requires us to help individuals and families put the pieces together after an oftentimes catastrophic event, we also work diligently to help “get the word out” to help make sure that individuals are adequately protected in the event that unexpected tragedy strikes.

This is as important as ever during the current pandemic, and in the weeks, months and years we transition to what is likely to be a “new” normal.

Although California vehicle traffic has been substantially reduced during countywide and statewide shelter in place orders, as folks return to work and begin socializing in greater numbers, vehicle traffic will increase and accidents will occur in much greater numbers. Given the heavy reliance on automobiles in California, one of the easiest ways that someone can protect themselves—whether they inadvertently cause or are injured in a collision—is to ensure they are properly insured.

While this can be a tough pill to swallow in times of massive layoffs and record unemployment, fully and adequately ensuring yourself is usually much less expensive than you think (for substantial peace of mind).

The goal of insurance is to protect your assets. Thus, when you cause an accident and someone is injured, you expect your automobile insurance company to defend you from any lawsuit and pay the other party’s damages so that you do not have to.

However, be aware that your insurer will only pay up to the liability limits in settling claims against you. Therefore, if you have a network (including equity in your home) greater than the amount of the automobile liability insurance limits, you may want to consider increasing your limits.

Most individuals assume that if you doubled the protection afforded to you under your policy it will double your cost. That is not how insurance pricing works, and oftentimes you can more than double your coverage for a very nominal increase in cost—sometimes in the range of 10%. While that is more money, the peace of mind knowing that your hard-earned assets are protected is well worth the nominal cost.

The other shortfall that we frequently encounter is clients who have diligently purchased appropriate limits for liability and thus protect themselves if they cause an accident while failing to increase the limits for coverage if they suffer injuries caused by an uninsured or underinsured driver.

The unfortunate economic impact of the COVID-19 pandemic will mean that more and more people will be on the road with lower insurance limits or no automobile insurance at all. All Californians should make sure that your uninsured/underinsured motorist (UM/UIM) coverage is for the same limits as your liability insurance.

This makes practical sense; you certainly want to insure yourself as much for the negligence of others as you want to insure others that you accidentally injure. And from a financial standpoint, UM/UIM costs pennies on the dollar compared to liability coverage. For example, I recently consulted with a client who more than doubled their UM/UIM coverage for less than $20 a year.

Accidents caused by distracted and negligent driving occur no matter the state of the economy. So in a car-dependent culture like California, we highly recommend that during these troubling times, you review your insurance limits and consult with your insurance broker or agent to ensure that you are adequately protected—whether you cause the accident, or are injured by someone else.