The Haynes Firm - April 2020


APRIL 2020

HowMuch Automobile Insurance Do I Really Need?

We’re probably all familiar with the Allstate commercials featuring the character “Mayhem,” who inflicts some form of bizarre disaster upon a driver and then warns that “your cut-rate car insurance”may not cover the damage. He then tells you to get your insurance through Allstate “to be better protected from Mayhem, like me.” At our firm, we have seen firsthand how some of these “cut-rate” insurance companies really do treat their clients poorly when a crash happens, so it’s a good idea to purchase your auto insurance coverage through a reputable and recognizable insurance company. But you might be thinking: Once I’ve chosen a good company, how much insurance do I need? Hopefully, anyone reading this newsletter is covered by an auto insurance policy that provides coverage in the event that you cause an accident or injury. Liability insurance provides coverage when you, or someone driving your car with your permission, causes property damage or bodily injury to another party. In Tennessee, most of these policies start at the minimal coverage amount of $25K/$50K, which increases to a $50K/$100K policy, then a $100K/$300K policy, then a $250K/$500K policy, and beyond. As your coverage increases, so does your premium. The first number shows howmuch the insurer will pay for an injury to any“one person.” The second number reflects howmuch they will pay for any“one accident.”For example, if you have the $25K/$50K policy, the insurance company will pay up to $25K for any one person injured. If more than one person is injured in the crash, the policy will pay up to $50K total, but still never more than $25K for any one person.

Ask your insurance company to send you your “declarations page”if you don’t know howmuch coverage you have purchased. If the other person is injured in a crash and must be admitted into the hospital; requires radiological studies like X-rays, CT scans, or MRIs; or has broken bones or other serious injuries, their medical expenses could easily surpass $25K before they are ever discharged. That could leave you personally responsible for any damages in excess of $25K. For this reason, most experts will advise that you should carry at least $100K/$300K in auto liability coverage, and more if your budget allows. Keep in mind that many auto insurers offer umbrella policies that can provide additional liability coverage in the event that your underlying coverage is not enough, but there are often conditions to qualify. You may want to speak with your auto insurance representative about an umbrella policy because those policies can often be purchased for a modest increase in your premium. But what happens if you aren’t at fault for a car crash? If someone hits you, doesn’t their auto insurance policy pay? Yes, if they have insurance and only up to the limits of insurance that they carry. That’s why everyone should carry uninsured/underinsured motorist (UM/ UIM) coverage. This insurance provides you additional coverage over and above the policy limits of the at-fault party. However, your UM/ UIM policy will provide additional coverage only to the extent your policy limit is greater than that of the at-fault party. For example, let’s say you’ve purchased $50K in UM/UIM

coverage. If someone hits you from behind, and you are injured, the at-fault party will then offer his minimum limit of $25K. If you can prove your damages are more than that amount, then your auto policy may pay up to an additional $25K for a total of $50K. Often, there is a disagreement between you and the auto insurance companies involved as to how much you should be entitled to as a result of a car crash. In that event, you may have to take your case to trial to have a jury decide how much your claim is worth. Automobile insurance can be complicated. There is a lot more to know about how auto insurance works following an auto crash than what’s included here, but the takeaway is that it’s a good idea to purchase as much auto insurance as you can afford. You truly will be “better prepared for mayhem.”We’ll be happy to speak with you about your auto insurance and how it might apply in the event of a car crash. Stay safe out there!

REFERRALS WELCOME We thank you so much for referring clients to us over the years. We are grateful that you have trusted us with taking care of those who need our services. For any referrals, please contact us at 423-928-0165 or fill out our online contact form at

-Olen Haynes,Jr. | 1

Published by The Newsletter Pro •

Made with FlippingBook - Online Brochure Maker