As you may have noticed, insurance policies are not easy to understand. Even the best policies, which claim to be written in "easy to read" format, can be confusing and sometimes downright unintelligible. Often the parties to an insurance dispute have to let the court determine what a policy really means.
However, the basic concepts behind an auto insurance policy are not complicated. Frankly, everyone who drives a vehicle or owns an insurance policy should have at least a general familiarity with what is inside that lengthy document. The following summary, while very general, should help.
Most auto insurance policies have two general coverage parts. Part One includes Liability Insurance, and Part Two includes Coverage for your Vehicle.
PART ONE - LIABILITY COVERAGE
Liability to Others
In Oklahoma, as in most states, every driver is required to have liability coverage. This coverage provides that if you are at fault in causing injury to another person or damage to someone else's property, your insurance company will pay for that injury or damage. The current minimum coverage limits are ten thousand dollars of liability per person, with twenty thousand dollars of liability for each occurence. This is a "split limit" coverage.
Though this is the minimum amount required, higher levels of coverage are available. How much the insurance company must pay depends upon how much coverage you purchase. Naturally, higher limits of coverage cost more money.
The amount of coverage will show on the front page of your policy, called the "declarations page". Although Oklahoma has a minimum amount of liability coverage that is required, you always have the option to purchase more, and it is frequently a very good idea to do so.
Let's look at an example of a $10,000/$20,000/$10,000 split limit policy, to see how each type of coverage would pay. Assume that the accident is your fault.
Example : You hit a Mercedes Benz and injure the driver and two passengers. The Mercedes sustains $10,000 damage, and each of the individuals has $6,000 in injuries. (Total of $28,000) Our example split limit policy will pay the full $28,000 ($6,000 to each of the three individuals and the policy limit maximum of $10,000 property damage for the Mercedes).
Another very important feature of your liability policy is that if you cause an accident and the other driver brings a lawsuit, your insurance company will hire a lawyer to represent you at no cost to you. The amount the company pays to the lawyer will be in addition to the amount of coverage you have for payment of damages, as shown on your declarations page.
Med Pay
Your liability coverage may include Medical Payments ("Med Pay") benefits. Med Pay coverage is widely available, but you will have to ask your agent for it.
Uninsured and Underinsured Motorist Coverage
Oklahoma requires that auto insurance policies have Uninsured and Underinsured Motorist Coverage unless you specifically reject it in writing. The amount you are assumed to have is the statutory minimum for laibility, or ten thousand dollars. As with liability coverage, you can purchase additional UM coverage, up to your liability limits.
Uninsured and underinsured motorist coverage protects YOU in the event you are injured through the fault of someone else and they do not have sufficient insurance, or any insurance. For example, if you are rear ended by someone who is uninsured, you can bring a claim against your own insurance company under your uninsured motorist coverage and you are entitled to collect the same recovery as if the at-fault driver had insurance.
Underinsured motorist coverage is similar. Assume that the at-fault driver had a $50,000 liability policy but your injuries have a reasonable settlement value of $80,000. If you have $100,000 in underinsured motorist coverage, then you will either collect the $50,000 from the at-fault driver's insurance company and the additional $30,000 from your own company, or collect the entire $80,000 from your UM carrier and let them collect the at-fault driver's liability coverage to repay a portion of the amount they paid to you. Oklahoma law is constantly developing on this topic, so consulting a lawyer knowledgeable about UM coverage is a wise course of action.
PART TWO - COVERAGE FOR DAMAGE TO YOUR CAR
The second part of an auto policy covers your car in the event it is damaged or destroyed in a collision or otherwise. There are two types of coverage you can purchase, called collision and comprehensive. You are not required to purchase these coverages. However, if you take out a loan to purchase a car, or you are leasing a vehicle, the lender will require that you purchase these coverages on the car to protect the lender in case the car is damaged or stolen.
Collision Coverage
If you purchase collision coverage, the insurance company will pay to repair your car if it is damaged in a collision, regardless who caused the accident. If the repairs would exceed the value of the car, they may consider the vehicle a total loss and pay you the fair market value of your vehicle.
Collision coverage will have a deductible, which is a portion of the repairs which you must pay. For example, if the cost to repair your vehicle is $3,000 and you have a $500 deductible, you will pay $500 and the insurance company will pay $2,500.
Comprehensive Coverage
If you purchase comprehensive coverage, the insurance company will pay to repair your car if it is damaged other than in a collision, or if it is stolen. Examples of when comprehensive coverage would apply are:
Comprehensive coverage usually has a deductible also, and the coverage is less expensive than collision. Because of this, you can usually ask for a smaller deductible on comprehensive coverage than on your collision coverage without driving up your premium. Generally you may purchase comprehensive only and not collision (but not the other way around). Insurance agents often recommend keeping comprehensive coverage on an older vehicle, even after it is no longer cost effective to keep collision coverage.
A GENERAL WARNING!!!
As we said, insurance policies are complicated. The above outline will give you a general idea how coverage works. However, many fact situations arise that raise complicated questions. For example, you are driving a rented car, or a friend's car. Or you are a passenger in someone's car, or you are a pedestrian, or your son is hit on a bicycle. You will need to determine:
In these more complex situations, you need to seek expert advice. You will want to talk to your insurance agent. You may need to seek the advice of an attorney.
The above is not legal advice. That can only come from a qualified attorney who is familiar with all the facts and circumstances of a particular, specific case and the relevant law. See Terms of Use. |