So you heard or saw an advertisement for low cost auto or motor vehicle insurance and you are thinking of making a switch: DON’T DO IT until you have read about and considered all aspects of such insurance coverage. Otherwise, you might have saved a few bucks, but exposed you and your family to inferior coverage—and, in case of some hard-nosed companies, exposure to being sued, should you ever cause an accident.

We want to invite our readership to consider some of important factors that ought to come to mind when one is selecting a company for auto or motor vehicle insurance. The airwaves are full of advertisements, and most of them feature some combination of alleged advantages in cost and fast service.

The problem is, there is a lot more to auto insurance than just those two factors, and we believe factors we list herein are MORE important than just fast service or cost. The fact is, auto insurance will most likely come to your rescue at some point, so it's imperative to purchase a worthwhile policy.

The very first thing to consider is your knowledge of product you are about to buy. How can you make a knowledgeable decision, comparing one company’s coverage to that offered by another, unless you know what each component of policy will do for you?

DO NOT COMPARE one insurance company with another until you have done necessary research. Insurance companies and their practices just differ too much to allow one to assume certain practices are “standard throughout industry”. For example, while your company may pay for chiropractic treatments for your eighteen months, low-cost carrier you are considering might have a hard-nosed policy of terminating chiropractic benefits after only four months. Wouldn’t you agree that a person should know that type of defect before jumping in with a new company?

Glossary of Terms to Consider When Buying Insurance:

Here is a brief glossary of terms you will encounter during your research: 1.Full Coverage: You better not rely upon this term at all, since it DOES NOT MEAN that you have full, comprehensive coverage. Instead, all this term indicates that you have all minimum coverage for your state of residence; it does not necessarily mean you will always be fully covered, since there are a lot of insurance provisions available in addition to minimum coverage.

2.Split Limits and Combined Single Limits of Liability: Have you seen your bodily injury liability limits denoted as (25/50/25), or something similar? Split limits of liability provide for separate coverage limits for bodily injury (or Underinsured Motorist coverage). In this example, limits are $25,000 per person bodily injury, $50,000 per accident aggregate bodily injury, and $25,000 per accident property damage. A combined single limit policy has one coverage limit for total cost of injuries and damage, but you will rarely see them because split limits of liability are much more common. 3.Policy Limits Per Person: The maximum amount of money your insurance company will pay out for any one individual for bodily injury losses; many states have minimum required limits.

Think About it: You Need to Buy Insurance to Protect Yourself, Passengers, and Family Members by Purchasing Underinsured Motorist Coverage (part 4 of 4)

One serious mistake is to decline UIM coverage. Some companies require that you purchase UIM in same amounts as liability insurance. However, many companies, depending upon state law, are authorized to sell denominations of UIM coverage less than liability limits. The insured thinks that he is providing some satisfactory minimal coverage for his family and decides to save some money with lower UIM limits. However, UIM is probably most important place to spend money.

You are not as likely to cause an accident, as you are to be a victim of an accident. At least if you are taking time to read this article, you are probably a person who will exercise more care and judgment in your driving than ordinary person. Therefore, it is more likely that you will be making a claim against another person for injuries sustained by you at hand of third party tortfeasor. In this instance, tortfeasor may (but likely will not) have sufficient insurance to cover you and your passengers for all of your medical expenses, wages loss, and general damages. If not, then tortfeasor is said to be “underinsured”. In that instance, balance of value of your claim, above bodily injury policy limits of tortfeasor, is responsibility of your own company’s UIM coverage.

A third possibility is if tortfeasor is uninsured. This is a distinct likelihood if someone who is reckless, or who has a drinking problem or who is driving with a suspended license involves you in their traffic habits. They caused you and your passengers harm, but they have no insurance. You will be making your entire claim under your UIM polity limits.

All too often, we have seen serious injuries to individuals and their families receive little or partial compensation because insured elected to “save money” by not purchasing maximum UIM coverage available to him. Purchase as much UIM coverage as you can.

Be Honest

A word of caution in dealing with your insurance company: don’t try to fool them on any of information requested, or by insuring only one driver for each of family vehicles. We have numerous cases holding that one family member is not covered because he or she was not named as a driver of another family vehicle. Questions of whether vehicle was “available for regular use” of any individual are complex issues, and history tells that you will lose. Disclose full number of drivers and you will have knowledge that you and family members are covered.

The same thing pertains to marital status and student status of children. Our recommendation is to be honest in your application and in your relationship with your company. The few dollars you “save” otherwise will never be a bargain should you loose out in long run. A contract entered into with materially fraudulent representations can be voidable by company under some circumstances.

Table of Insurance Coverage Requirements, by State

Most states require that you have liability insurance. This covers you when you're at fault in an accident. If you live in New Hampshire, South Carolina, Tennessee or Wisconsin, you aren't required by law (yet) to have liability coverage. For rest of us, mandatory coverage varies according to state. In chart below, minimum liability limits are read as follows (in thousands of dollars): bodily injury liability for one person in an accident/bodily injury liability for all people injured in an accident/property damage liability for one accident.

So, for Alabama, minimum requirements are $20,000 of bodily injury liability for one person, $40,000 bodily injury liability for all people and $10,000 property damage liability.

StateRequired coverage typesUninsured/Under-insured Motorist Coverage Required?Minimum liability limitsNo fault?