When you insure your vehicle, you expect that you will be able to get reimbursements for damages or injuries incurred after an accident. However, the amount you get from the insurance company may be less than what you think. It is essential that when you buy a policy, you understand the terms and conditions clearly and other aspects that can affect the amount you are reimbursed. It is good to know exactly what is covered in your insurance policy than wait to discover that the coverage is less than you expected when an accident occurs. Some of the aspects that could affect your insurance cover are step down provisions and underinsured coverage.
Step down provisions
The step down provisions are likely to lower the amount of insurance coverage you have. If you allow another driver to drive your car and is involved in an accident, this may lead to step use of step down provisions when compensating for the damages caused. Many companies lower the compensable amount to minimum liability insurance requirement by the state, which may be less than your coverage.
For example, liability coverage of 50/100/25 meaning $50,000 for bodily injury for one person, $100,000 for injuries of all passengers and $25,000 for property damages may be reduced to minimum state insurance requirements, which are lower than what you have already paid.
In Ohio, the liability insurance coverage is set at $12,500 for bodily injury of one person, $25,000 for injury of all passengers and $7,500 for damages on property after an accident. This means that in a step down provision, the insurance company may reduce your coverage to these lower state limits meaning that you get compensated lower amount than what you are actually entitled. It is therefore important to call your insurance company and inform them if you are going to allow your relative to use your car.
Complexities of underinsured coverage
Another insurance coverage aspect that could affect your actual reimbursement after an accident is underinsured motorist coverage. Underinsured coverage pays for injuries caused when the motorist at-fault does not have sufficient liability cover. There are two coverages that cover against insufficient insurance or lack of insurance coverage by the other motorist and they are underinsured and uninsured coverage.
Uninsured coverage is applicable if the motorist at-fault does not have any coverage at all. The underinsured is applicable where the motorist has insufficient coverage. Whereas these two coverages work of similar concepts, the application of underinsured coverage may be quite complex than you may imagine. What makes the reimbursement of underinsured coverage complex is that the amount paid by the at-fault motorist is deducted from what you are entitled to claim against your own underinsured coverage.
For example, if you are injured in an accident caused by another motorist and the medical bill amounts to $30,000 and the motorist has $15,000 in bodily injury insurance and you have $15,000 in underinsured coverage, the payment from the underinsured driver is deducted based on what you are entitled to claim on top of your $15,000 of underinsured coverage. This is a complicated aspect because you are likely to get nothing if your underinsured coverage is less than that of the motorist at-fault in causing an accident.
In the above case, it means that your insurance company would not settle anything and you have to bear the extra $15,000 that is short of the total medical expenses because this is what can be paid from the insurance of the underinsured motorist. In order to for the insurance coverage to help you, you need to have your own underinsured coverage, which is higher than that of the motorist who caused the accident.
It is important you discuss these aspects with your insurance company and get information on how underinsured coverage is settled whenever an accident occurred. Otherwise you may be surprised to learn that you are not paid for injuries you have suffered.
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