Insurance Coverage Info

The descriptions below are simple, basic explanations of some common types of consumer (not commercial) insurance coverages. They are not designed to be comprehensive,
and in each case the injured person or their attorney needs to look carefully at each particular insurance policy or policies involved to determine what types and amounts of coverages are available in that particular situation.

Curran Law Firm has the knowledge and experience you need to thoroughly evaluate your potential case. If you have been injured but are unsure about what types of claims you can file, please contact us as soon as possible. Robert Curran is committed to getting all the information, helping interpret complicated insurance policies, and giving you guidance and trustworthy advice in your time of need.

Everyone should periodically look at their insurance coverage to make sure that you have enough coverage to not only protect your assets if you hurt someone else, but also to fulfill your own needs in case you get hurt by an uninsured or underinsured motorist.

A very commonly used term is “full coverage.” Most of the time, when I ask a client right after a crash how much and what types of insurance they had, they’ll say to me, “I’m not sure, but I know I’m protected, because I told the agent I wanted full coverage.” Most times, we then look at their policy and see that they did not buy some types of optional coverages, or if they did buy them, they are in amounts too low to fully cover the person’s injury. I then have to explain to my client that walking into an insurance agent’s office and asking for “full coverage” is essentially the same as saying to a waiter “bring me some food” — it doesn’t really tell them what you want. Insurance agents are supposed to realize this, and inform you about the various coverages you can get and explain what each is for, so that you can make an informed decision. That seems to rarely happen, but unfortunately Missouri law is anti-consumer and generally protects insurance agents from claims that they didn’t inform their customers about their options. Here’s a basic description of some of the types of consumer coverages available:

  1. Motor Vehicle Liability Coverage
  2. Uninsured Motorist Coverage (“UM” Coverage)
  3. Underinsured Motorist Coverage (“UIM” Coverage)
  4. Medical Payments Coverage
  5. Collision Coverage
  6. Comprehensive Coverage
  7. Homeowners Insurance
  8. Excess or “Umbrella” Insurance

1. Motor Vehicle Liability Coverage – (Required By Law)

This is the most basic component of a motor vehicle insurance policy, and in Missouri it’s required by law to be purchased. In this type of coverage, the insurance carrier promises to pay money to people other than its customer. The company issuing the policy essentially agrees that it will pay any money legally owed by the owner or operator of a specified motor vehicle to any person who is injured or damaged by the insured’s carelessness, up to a specified maximum dollar amount. Typically, there will be one specific maximum dollar amount payable to a single injured person, with a separate, larger maximum dollar amount payable to all injured persons as a result of a single accident, with a separate maximum dollar amount payable for property damage.

Missouri’s Motor Vehicle Financial Responsibility Law (which lawyers call the MVFRL) requires a motor vehicle owner to carry a policy with at least “25/50/10” in coverage. That means that the most any one injured person can get is $25,000, and that the maximum amount that the insurance company will pay for personal injuries for any single accident is $50,000, no matter how many people are injured. The last number means that the most they will pay for damage to any property from a single accident is $10,000.

For instance, let’s assume that Mr. Smith carried the minimum legal amount of ABC Insurance Company liability insurance and carelessly caused a motor vehicle accident in which four people were severely injured when he ran through the front window of a coffee shop. Even if Mr. Jones is made a quadriplegic from this crash, the most that ABC will pay to Mr. Jones under this policy due to Mr. Smith’s carelessness is $25,000. And the most that ABC will pay to the group of four injured people collectively is $50,000. If the coffee shop owner suffered $60,000 in property damage, the most ABC will be pay for the property damage will be $10,000.

Now these numbers don’t mean that’s the most these people can possibly get; it just means that that’s the most they’re going to get from ABC Insurance Company. The victims can still go after Mr. Smith for any additional unpaid amounts of any verdict after trial, and send the Sheriff out to take his house, his car, garnish his wages, bank account, etc. So Mr. Smith better be careful to make sure he’s bought enough insurance to cover any claims against him to protect whatever assets he owns. (There is a way to sometimes get an insurance company to pay the full value of a claim, even if it’s above the maximum amount shown on the insurance policy.

2. Uninsured Motorist Coverage (“UM” Coverage) (Required By Law)

This is another legally-required component of a motor vehicle insurance policy in Missouri, but with an important difference. In this type of coverage, the insurance carrier promises to pay money to its customer, not to other people. In UM coverage, the insurance carrier essentially agrees that it will pay any money legally owed by an uninsured owner or operator of a motor vehicle to any of its insureds (and occupants of the insured vehicle) who are injured or damaged by the uninsured motorist’s carelessness, up to a maximum dollar amount specified on the declarations page.

If Mr. Johnson, who has no liability insurance of his own, crashes into Mrs. Walker’s car and she breaks her leg, Mrs. Walker can make a claim against her own insurance company, under her uninsured motorist coverage. In essence, her insurance company will act as if it insured Mr. Johnson at the time of this crash.

To illustrate one complexity in this type of coverage, Missouri’s MVFRL defines an uninsured motorist as someone who either has no liability insurance at all, or someone who carries less than the $25,000 in insurance required under Missouri law. In other words, if someone from another state drives into Missouri in a vehicle insured with the $15,000 in coverage required by their home state, even though that person does have insurance, they are still technically “uninsured” under Missouri law, and the injured person can make a claim under their Missouri uninsured motorist coverage.

Claims can typically be made under this type of coverage even if the insured vehicle was not in any way involved in the accident. For instance, if Mr. and Mrs. Dixon have a daughter who is on vacation in a different state when she is hit by an uninsured motorist while crossing a street, Daughter can make a claim under Mrs. Dixon’s XYZ Insurance Company policy insuring Mrs. Dixon’s 2005 Ford, even if that car was sitting in their garage when the accident happened. In addition, Daughter can also make a claim under the QRS Insurance Company policy insuring Mr. Dixon’s 2007 Chrysler, which was also not involved in accident, since Missouri law permits insureds to always “stack” uninsured motorist coverages, or add them to each other up until the point the injured person has been fully compensated.

One thing we’ve seen again and again is someone who comes in and shows us a policy that they’ve been paying the premiums for. The policy provides a larger amount of liability coverage (such as $100,000), but the minimum amount of uninsured motorist coverage ($25,000). We recommended that you always carry as much in UM coverage as you do in liability coverage. Get a quote from your insurance agent, and you’ll see that the increase in your premium is extremely small, sometimes as little as only $20-50 per year.

3. Underinsured Motorist Coverage (“UIM” Coverage) (Optional)

This is an optional component of a motor vehicle insurance policy in Missouri. In UIM coverage, the insurance carrier issuing the policy essentially agrees that if the careless person who caused the injury is insured and that carrier pays its full policy limits to the injured person, but that amount isn’t enough to fully compensate the injured person, the UIM carrier will pay more additional money to its insured to help compensate them. Exactly how much they’ll pay depends not only on what the injury was and how much insurance the careless person had, but also on how the UIM policy language is written. As with UM coverage, the insured’s vehicle doesn’t even have to be involved in the crash to be able to make a claim for UIM benefits.

Since UIM coverage is not required by law, the insurance company gets to write its policy to cover (or not cover) pretty much anything it wants, and calculate the amounts it should have to pay. Not surprisingly, in recent years insurance carriers have been cutting back on how much they’ll cover in a UIM situation. For instance, up until a few years ago, a $50,000 UIM policy typically meant “We’ll pay you up to an additional $50,000 over and above what the bad driver’s insurance company paid you.” Most companies have re-written those policies to dramatically decrease or even eliminate payouts under their UIM policies in some situations. For example, assume an injured person had $50,000 in UIM coverage and is made paralyzed for life by a driver with $50,000 in liability insurance coverage. In the past, the victim would get the $50,000 policy limit in liability insurance money, and her UIM carrier would then give her an additional $50,000.

Most insurance companies now have re-written their coverage to basically say that the victim now gets no money from their own carrier in this situation. The way they did this is to change the meaning to say: “When we issue you a $50,000 UIM policy, what we’re doing is making sure that, if your injuries are severe enough to warrant a $50,000 payment, you get at least $50,000 for your injuries. But we’re going to deduct from your coverage any money you get from the bad driver’s insurance company.” That means that, in this example, even though an objective person might view the paralyzed victim’s damages as being in the millions of dollars, her insurance company will pay her nothing at all. They’ll say, “We promised that you’d get at least $50,000; you got $50,000 from the bad driver, so we get a credit for that $50,000 towards our $50,000 policy limit, and even though that amount was inadequate to fully compensate you, we don’t owe you anything.”

Though additional laws are needed to protect consumer from these vanishing promises, there is a Missouri law that essentially says an insurance company can’t claim any credits if the UIM policy is only for $25,000.

We recommended that you always carry as much in UIM coverage as you do in liability coverage. Get a quote from your insurance agent, and you’ll see that the increase in your premium is extremely small, sometimes as little as only $20-50 per year.

4. Medical Payments Coverage (Optional)

This is an optional type of coverage that we recommend you buy. Also called “med-pay,” in this type of coverage, the insurance carrier issuing the policy essentially agrees that it will pay the reasonable and necessary medical expenses of any injured person who was either occupying the insured motor vehicle at the time of the crash or a pedestrian who was hit by it. This type of coverage becomes even more important if you do not carry health insurance coverage, or have a high deductible or co-pay on your health insurance. We recommended that you always carry medical payments coverage of at least $10,000.

As with some other coverages, the insured’s vehicle doesn’t have to be involved in the crash in order to be able to make a claim for medical payments benefits.

5. Collision Coverage (Optional)

This is an optional type of coverage that we recommend that you buy. If you have a loan on your vehicle, your lender will almost always require this type of coverage. In this type of coverage, the insurance carrier issuing the policy agrees that it will pay to repair or replace the specific motor vehicle named in the policy if it is involved in a collision. The fair market value of the motor vehicle at the time of the collision is usually the most that the insurance company has to pay. Whether or not you need this type of coverage really depends in part on the year make and model of your motor vehicle, and how well you could financially suffer the complete loss of that motor vehicle if the collision is your fault. It’s also important to note that typically an insurance company couldn’t care less how much you paid for your vehicle or may still owe the bank; the most they’ll pay is the vehicle’s fair market value at the time of the collision. In other words, if you pay $4,000 on Monday for a vehicle which is really only then worth $2500 according to the NADA Guide or Kelly Blue Book, and it’s totaled on Tuesday in a collision, the most your company will pay you will be $2500. They’ll claim that’s all they owe, and that it’s not their problem that you overpaid and will still owe the bank $1500. For that reason, getting theses guides’ values to vehicle worth is also a very good way to negotiate a better purchase price with a seller and make sure you’re not overpaying for your vehicle.

6. Comprehensive Coverage (Optional)

This is an optional type of coverage that we recommend that you buy. In this type of coverage, the insurance carrier issuing the policy agrees that it will pay to repair or replace the specific motor vehicle named in the policy if it is involved in some type of destructive event other than a collision. Examples of things that might be covered under portion of an insurance policy include: hail damage, tornado, hurricane, damage from falling trees. The fair market value of the motor vehicle at the time of the collision is usually the most that the insurance company has to pay. Whether or not you need this type of coverage really depends in part on the year make and model of your motor vehicle, and how well you could financially handle the loss of that motor vehicle if the collision is your fault. (Also see the discussion on vehicle values in Collision Coverage, above, which also apply here).

7. Homeowner’s Insurance

In general, homeowner’s insurance not only provides coverage to the owner in case of a fire or other loss, but also provides liability coverage to the insured for certain types of claims. These policies almost always say they don’t provide any liability coverage for motor vehicle accidents, but they may provide coverage in the event the insured accidentally cause damage in other ways. For instance, there may be coverage if the homeowner is sued for accidentally causing a flood at a neighbour’s home due to landscaping changes, or if a neighbor’s child breaks his arm while not being adequately supervised by the homeowner who’s supposed to be watching him for his parents. There may also be theft loss coverage for things lost or stolen even while not at home. Almost every mortgage lender requires this insurance, which you should always carry if you own your home.

8. Excess or “Umbrella” Insurance

This is a type of optional coverage that we recommend. Excess or “umbrella” insurance provides coverage for an insured after another policy has already paid its limits of insurance. For instance, suppose Mr. Smith carries $250,000 in motor vehicle liability insurance, but accidentally paralyzes someone in a car wreck. His car insurance company offers their $250,000 limit, but the victim’s medical bills alone may be far more than that. If he has no other insurance, Mr. Smith may lose his home or have to declare bankruptcy. But if he carries excess insurance, his excess carrier would then come in and pay the losses, up to their policy limit.

Since there are relatively few claims against these kinds of policies, they are usually fairly inexpensive (although the issuer of an excess policy may require you to carry a slightly more costly auto insurance policy). These policies sometimes cost as little as $150 per year for an extra $1 million in coverage.