What Insurance Coverage Should I Get?
April 2, 2021
What Are the State Minimum Requirements?
Arizona state minimum requirements recently changed in 2020. Currently, the minimum levels of financial responsibility for bodily injury liability limits are $25,000 per person/$50,000 per accident. With this amount of coverage, no more than $50,000 total can be paid out in an accident involving 2 or more claimants, and no single claimant can recover more than $25,000.
If there were five injured parties in an accident, under this policy, the $50,000 would be divided between the five parties. Sometimes the insurance company will propose a settlement amount to each party, but oftentimes they let the parties know the coverage amount and ask them to submit their proposal for what should be given to each party (usually proportionate to their medical expenses). This is called a global settlement, and in many cases, it results in one or more parties receiving less than the cost of their medical expenses, and little to nothing for their pain and suffering. If you are one of these injured parties, how can you make up the difference?
UIM and UM
Underinsured motorist (UIM) and uninsured motorist (UM) coverage are optional coverages available to be added to your policy. Though often overlooked, these additional coverages are well worth the cost, and I recommend high policy limits on them to all of my clients and friends. UIM comes into play in situations such as the one outlined above. When the at-fault driver has a bodily injury liability limit that is exhausted without fully covering the value of the injured party’s claim, they are considered an underinsured motorist for purposes of that particular claim. The injured party can then go through their own auto insurance policy’s UIM coverage to recover the additional amount over the adverse driver’s policy limits. This is called a first party claim because it is accessed through your own policy.
Uninsured motorist coverage is another first party coverage that can be used when the adverse driver has no insurance, or when the injured party is involved in a hit and run and there is no insurance available from the unidentified at-fault driver.
It is still important to have attorney representation when making a first party claim because they are evaluated subjectively and on a case-by-case basis by the insurance company, just like any claim to an adverse insurance company. You are not automatically entitled to the full amount of your UIM or UM policy limits. The process for making a claim under these coverages is very similar to the process for a third party claim. I provide your insurance company with a demand package that includes a detailed letter regarding your treatment and injuries. We then proceed to negotiate a fair value for the claim. If settlement cannot be reached, we would generally agree to a binding arbitration with the insurance company so that the claim can be evaluated by an agreed upon arbitrator whose award is binding on both parties. (I will provide a future article on the arbitration process to explain this in further detail). This takes the place of the normal litigation process involved in third party claims which begins with filing a civil complaint.
What Other Coverage Should I Get?
Medical payments coverage is another option that can be added to your policy. This is also first party coverage that is available for you to use on your policy any time you or any passengers in your vehicle are injured and need immediate access to funds to begin treatment. Please visit our Articles page to find the article entitled “Medical Payments Coverage” for more in depth explanations as to what medical payments coverage can be used for and why it is an important coverage to add.
Arizona minimum requirements regarding property damage liability limits were recently raised to $15,000. With the cost of vehicles and repairs continuously increasing, $15,000 may cover only a fraction of the property damage caused, especially if any vehicles are totaled. While you would not be subject to any state imposed penalties for only having coverage of $15,000, a higher coverage amount would better shield you from potential personal liability for property damage caused to another.
If you would like additional or more specific information regarding insurance coverage, please call or email me for a free consultation at 480-450-0626 or kay@joneslegalaz.com.
This article should be used for informational purposes only. It is not, nor is it intended to be, legal advice. It does not create an attorney-client relationship with any reader. If you need legal advice regarding these issues, please feel free to contact me at 480-450-0626, or contact an attorney in your area.