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What Automobile Liability Insurance Coverage Must I Have and What Insurance Should I Have?

By July 6, 2018No Comments

Q. What insurance am I required to have on my vehicle in Louisiana?

A. In Louisiana, you are required to maintain minimum liability insurance of $15,000 of bodily injury coverage per person, $30,000 of bodily injury coverage per accident, and $25,000 of property damage coverage. Liability insurance covers damage to other people, or their property, caused by an accident which was your fault. This is technically the only coverage you are required to purchase by law.

If you have a loan on your vehicle, your lender will require you to maintain additional insurance covering damage to the vehicle. This is called collision and comprehensive coverage. Collision coverage pays for the cost to repair your vehicle, or pays the fair market value if your vehicle is a total loss. The damage must occur in a collision, and it does not matter who was at fault in the accident. Comprehensive coverage pays for the repair, or total loss value, for damage to your vehicle which is not the result of an accident. This would include damage by vandalism, theft, hail, and flood. Both usually have a deductible; the higher the deductible the lower the premium cost to you.

Q. If that is the only insurance I am required to have, why should I pay more money for additional insurance?

A. Liability insurance will only pay someone who is injured in an accident which is your fault. Collision and comprehensive do protect your car, but only to reimburse the actual amount of your damages, up to the fair market value of the vehicle. So we recommend that you consider additional types of coverage which are available to protect you and any occupants in your car. By far the most important insurance of this type is UM coverage. UM stands for both “uninsured motorist” and “underinsured motorist.” This coverage protects you, or your passengers, if you are injured in an accident which was the fault of the other driver. If the other driver has no insurance, or insufficient insurance to cover your damages, your UM coverage will pay the claim, up to the limit of coverage that you select. This is important coverage because it protects you. You may only buy UM limits up to the amount of your liability insurance limits. In other words, if you have $15,000 of liability limits, you may only buy $15,000 of UM. Be careful when discussing UM coverage with your insurance agent. There are several types of UM coverage which provide “economic only” coverage. This only provides coverage for un-reimbursed medical expenses and lost wages. As the largest component of a personal injury claim may be the pain and suffering damages, we do not think it a good investment of your money to buy limited UM coverage.

We also recommend coverage called medical payments, which is available to cover the cost of medical expenses for you, or passengers in your vehicle, who may be injured in a collision, regardless of who is at fault. This coverage is available to cover medical expenses which are not otherwise covered by your health insurance, including deductibles or co-payments which you are obligated to pay. The cost of medical payments coverage is relatively inexpensive.

Additional coverages which you may consider, but we do not feel are as important, are coverage for rental vehicle, emergency road service and mechanical breakdown. You should ask your insurance agent about all coverages available, how much they each cost, and then decide which best suits your needs based upon the cost and your budget.

Q. What is the maximum amount of insurance coverage that I can buy?

A. While some smaller companies specialize in minimum limits policies, most automobile liability insurance carriers sell maximum limits of either $300,000 or $500,000. This would be the top limit of your liability and UM coverage through your primary vehicular coverage. You can, however, buy additional liability insurance, called “umbrella” or “excess” coverage, which most larger automobile carriers sell. Typical limits for this coverage are up to $2,000,000, although some specialized carriers provide larger policies. Excess liability coverage is a good idea if you have significant income or assets. It also provides the opportunity to increase your UM coverage.

Remember that you only collect insurance proceeds if you are in an accident, so the hope is to never be in that situation. This means that you should only buy insurance as necessary given your situation, and to the extent you can afford the coverage. If you have significant assets, such as a high paying job, a house, and savings in the bank, you should consider more liability insurance because you have more to lose if someone makes a claim against you. If you have no substantial assets, and if you have debt like student loans and credit card balances, then you have less to lose, may not need a great deal of insurance, and may not have the budget to purchase additional coverage. Once you decide how much liability insurance is appropriate for you, you should get the maximum UM which you can buy and which you can afford. After that, add on collision, comprehensive, medical payments, and rental coverage based upon your budget.

Note: No attorney-client relationship is created by your reliance upon the information contained in this article. This article contains general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal issues or problems.

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