Written by: Michael Roberts, August 18, 2021
I have full insurance coverage, so I am completely insured, right?
A question we ask clients at the beginning of a case is whether the client has automobile insurance and, if so, the types and amounts of coverages. Oftentimes, the answer to this question goes something like “I’m not sure, but I have full coverage.” In our experience, we have come to understand that “full coverage” seems to often mean the client has liability insurance that at least meets the minimum amounts required by Arizona law. Is this really “full coverage?”
Liability insurance covers you in the event you were at fault for an accident. Your liability insurance coverage will cover the other driver’s injuries and property damage up to the amounts of your liability coverage. However, in Arizona, the minimal amount of liability insurance for personal injuries required by law is only $25,000. If the other driver in the accident sustained personal injuries totaling $100,000, you would only be covered for $25,000 and could be personally responsible for the remaining $75,000. If you have personal assets, including a certain amount of equity in your home, multiple vehicles, and other property, the other driver could come after your assets to collect the remaining $75,000. For this reason, we strongly encourage you to meet with your insurance agent. You should discuss, among other things, your yearly income, the equity in your home, and any other financial assets, and determine the appropriate amount of liability coverage you can afford that would also protect your personal assets.
In addition to liability insurance, automobile coverage can also include uninsured and underinsured motorist coverage. Unlike liability insurance, this coverage is optional. You do not have to have it, but you should. This coverage insurers you in the event you were injured in an accident by a driver who had no insurance or insufficient insurance. If this occurs, your own insurance will pay you for your personal injuries up to the amount of your coverage limits. Remember, the liability insurance limits in Arizona are only $25,000. If you were seriously injured in an accident by a driver with $25,000 in liability limits, and no recoverable assets, the most you could potentially recover is $25,000. Oftentimes, this will not cover your initial hospital visit on the day of the accident.
There are also other optional coverages, including rental car coverage and medical payments coverage. In sum, you should speak with your insurance agent in detail about the types of coverages you currently have and the amounts of those coverages and determine if these coverages actually provide you “full coverage” based on your individual circumstances and needs.