Auto insurance is supposed to protect you in case of a crash – but you could be in for a surprise if you have less insurance than you think. And, after you’ve had an accident isn’t the best time to find out you’re short on coverage.
Carrying the minimum amount of insurance coverage required by South Carolina state law can make you “street legal” to operate a motor vehicle, but getting into a major accident you’re responsible for could cost you a great deal more.
Even if you have what you believe to be full car insurance coverage, you could still have less protection than you think because of exclusions and limits hiding in your policy’s fine print. Keep in mind that auto insurance policies can vary considerably when it comes to who’s covered, what’s covered, and when.
Don’t regard insurance as a commodity. You should evaluate policy features and restrictions as well as the company’s reputation and reliability when comparing car insurance quotes.
Below are six ways the coverage you have might be less than you expected.
1. Lower liability limits for some drivers borrowing your car
Depending on the state you live in, some insurance companies can include what’s known as “step-down provisions” for auto liability coverage, which will automatically lower the policy’s liability limits to the state minimum insurance requirements whenever you allow a driver who isn’t listed on the policy to use your car.
For example, let’s say you have liability limits of 100/300/50 ($100,000 for bodily injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident). In a moment of weakness, you loan your car to your girlfriend and she get in an accident. Your act of kindness may cost you big time – because under a step-down provision, your liability limits for an accident would automatically drop to your state’s minimum required liability limits – and those limits are going to be much lower than 100/300/50.
You may want to consult your insurance agent so you know ahead of time what to expect if someone borrows your car.
2. You’re confused by underinsured motorist coverage
You have Underinsured Motorist (UIM) coverage, but you’re confused on how it works. In short, UIM coverage kicks in when an at-fault driver doesn’t have enough liability insurance to pay all of your medical bills if you suffer serious injuries in an accident. UIM also pays for medical treatment in the event the at-fault driver has no insurance whatsoever.
While it may sound simple, the actual payout can be quite complicated as the amount paid from the at-fault driver’s liability coverage is deducted from the amount you can claim against your own UIM coverage. And, your own UIM coverage must be higher than the at-fault driver’s liability limits to do you any good.
3. You may not be covered for injuries if you drink and drive
Don’t assume you’re covered by your insurance if you drink and drive and get into a crash. As it turns out, 37 states have alcohol exclusion laws, which means insurance companies can deny medical coverage for injuries caused as a result of intoxication, according to the Governors Highway Safety Association. In other words – your insurance company could refuse to pay for your medical treatment should you crash and be injured while driving and impaired by alcohol or drugs.
4. Unlicensed drivers are excluded from coverage
Be aware – that if an unlicensed or suspended licensed driver uses your vehicle and crashes, some policies exclude coverage. Needless to say, you may want to refrain from letting just anyone drive your car, because if they get in a wreck and there’s no coverage, you’re the one who’s going to be held responsible.
5. Exclusions for using your car for business purposes
Many people make the mistake of believing they can use their car or truck for business – only to find out the hard way that many policies exclude coverage for any business use of the vehicle. In essence, if you’re delivering pizzas part time, you’re literally driving without insurance. This exclusion can also apply to other exposures, such as door-to-door sales, a landscaping business or newspaper delivery.
6. Restrictions for car theft
This could be one of the biggest surprises of all. Some policies exclude coverage for theft without any evidence of forced entry or suspicious nature. In addition, any after-market modifications to the vehicle you’ve made, including installing upgraded or custom equipment, may not be covered. Working directly with an agent who can explain the exclusions or who can possibly include the equipment into your policy could prove to be well worth your while.
Finding out you’ve got less insurance than you thought shouldn’t be an option. Make sure you’ve got the right amount of coverage at the lowest possible price. Why not get a free South Carolina auto insurance quote today?
Have you ever been in an accident only to find out you didn’t have enough coverage? Feel free to share your thoughts in the comments section below.