Auto Insurance: Are You At risk In These Economic Times?

By Joyce Novotny-Prettiman, Esq.

Everyone is pinching pennies in these complicated economic times. As dangerous as it is, some households will choose to go without auto insurance. This means you must be more vigilant about your own auto insurance coverage. According to figures released in 2006 by the Insurance Research Council, 15 percent of drivers nationwide were uninsured. With increasing unemployment rates, this percentage will likely increase.

What can you do?

To guard against this risk for you and your family, you need to review your auto insurance policy. Check to be sure that you have purchased uninsured (UM) and underinsured (UIM) motorist coverage. This is the coverage that provides you with protection if you are harmed either as the result of a careless act of a driver without auto insurance (an uninsured driver) or a driver with only the minimum coverage required by law (an underinsured driver). Though you are not required to purchase this coverage under Pennsylvania law, you don't have this protection without it.

How much coverage is enough?

The amount of UM and UIM coverage you may purchase is based in part on the amount of liability insurance that you purchase. Liability coverage is the fund from which your auto insurance company makes payment on your behalf if your driving results in an injury to someone else. You should always purchase UM and UIM coverage equal to the amount of your liability coverage.

Also be sure you have "stacked" your UM and UIM coverage. "Stacking" UM and UIM coverage multiplies the per vehicle coverage provided on your policy by the number of vehicles covered under that policy. You should avoid any suggestion to "waive" stacking. Be certain that you have enough coverage to protect you and your family if you would be seriously injured in a vehicle collision. Making budget cuts here could be very foolish.

What if I am injured and need help paying my monthly bills?

Ask your auto insurance agent if your policy provides you with "wage loss coverage." This coverage is often overlooked because it is not required by law. In order to avoid financial disaster, most people who are injured and unable to work due to an auto collision need help paying their monthly bills immediately. Wage loss coverage is vital to your financial health and helps give you the time you need to recover from an injury. This coverage comes from your own policy and will begin making monthly payments of up to 80 percent of your lost earnings after you are unable to work for more than 5 days because of your injury. With this coverage, you do not have to wait months, or even years, for a lump sum settlement to be reimbursed for your lost wages. The amount of coverage you need depends upon your monthly income.

Remember: Don't place yourself or your family at risk by deciding that you don't need uninsured and underinsured motorist coverage. In tough economic times, you need these coverages more than ever.

Full Tort + Stacked Uninsured and Underinsured Coverage + Wage Loss Coverage = FULL PROTECTION