Four Automobile Coverages Explained
1. Liability Limits
2. Uninsured/Underinsured Motorists Coverage
3. Lease Gap Coverage
4. Extended Non-Owner Endorsement
1. Liability Limits
Operating a motor vehicle is a very dangerous endeavor, even for the best of drivers. It only takes a split second to divert your attention before an accident occurs. If at fault for an accident that resulted in serious bodily injury to another person, you could be responsible for extensive medical costs.
You may be sued for damages that could incur a large judgment, and without adequate medical insurance, you could be facing this for the rest of your life. Your savings, home and future earnings would be at stake.
We recommend a combined single limit of $500,000 minimum. Avoid split limits of $100/300/50. The higher single limit costs only a few dollars more, and it provides so much more protection.
Steer clear from any agent or company that suggests lower limits or state required minimum limits. It is evident that they are not interested in your protection, but rather, in the protection of their insurance company.
The insurance company defends you (pays your legal expenses) only until the limits of insurance have been spent. Imagine you were involved in a serious accident and were the driver at fault. The insurance company knows it will lose the case, so they offer the policy limits to the injured person. You are now out of insurance and they no longer have to defend you. This is just one of the perils of purchasing low limits.
For approximately $160 per year, a family can purchase a $1 million umbrella policy that extends their homeowner's liability and auto liability. A large judgment against you or your family is more likely to arise from an auto accident. An umbrella gives you peace of mind for only a fraction of your total insurance budget. On average, a personal umbrella policy adds only 5% to your total insurance costs. You can select limits of $1 to $5 million. This is certainly the best value for your insurance dollar.
2. Uninsured/Underinsured Motorists Coverage
State law requires that all drivers have liability coverage to protect the public, and the State sets very low requirements so that everyone will comply. However, this system does not work effectively. It is estimated that 20% of Nebraska drivers are underinsured. In addition, many drivers simply buy the state mandated minimum limits of $25,000.
If you or a family member were seriously injured by another driver, the chances are very high that the other driver will be uninsured or underinsured. You should carry the same uninsured and underinsured limits as your liability limits. Remember, your personal umbrella policy does not apply to this coverage, so be sure to keep these limits high. This is important protection for you and your family.
3. Lease Gap Coverage
Leasing of automobiles has become popular in recent years. The leasing companies are very aggressive in getting the monthly lease payments as low as possible. This makes for a high "residual value" of the leased car. The lease contract makes you responsible for the residual value.
Approximately 500 cars are stolen in the Omaha metro area each month. In the event your leased car is stolen or totally destroyed, your insurance company is only obligated to pay the actual cash value or "blue book" value of your car. This value could be less than the balance on your lease contract. Your leasing company will look to you for the difference.
Lease gap coverage only costs about $5 per vehicle, per year and would settle the loss based on the balance of your contract. If you lease a car, you need this coverage.
4. Extended Non-Owner Endorsement
Did you know that the standard auto policy excludes coverage for "any auto furnished for your regular use" and not listed on the policy? A company car is such a vehicle. If your son drives your company vehicle to the store, he is probably not an approved driver by the employer, and the vehicle is not likely to be included in your policy. A simple endorsement could resolve this problem.
