The Falvello Law Firm

Wednesday, December 16, 2009

"Legal for Less"

So goes one of the commercials for low cost car insurance in Pennsylvania.

Many bigger Companies have followed suit with Allstate claiming that they will dump GEICO for you and save you $473.

Buyer beware. What they don’t tell you is that they are pushing policies with the least amount of protection for you and your family allowed by law. Many people, understandably looking for a premium savings, don’t realize this too-good-to-be-true catch.

You may be trading 100k in liability coverage that protects your assets for the nominal amount at the legal minimum of 15k.

You could be losing your right to make a claim for a chronic injury inflicted upon you by a reckless driver by selecting “limited tort” when you
previously had “full tort”, giving up not only your right, but the rights of all in your household.

You could be giving up income loss protection that pays to replace your income if you are disabled in any kind of an accident, even one that is your fault.

You could be lowering your limit to 5k for coverage that automatically pays your medical bills for treatment resulting from any accident, which when gone leaves you at the mercy of ever decreasing health coverage or no health coverage at all.

And perhaps more importantly, you may give up protection for you and your family if you are severely injured by someone with little or no insurance.

I’ll give you a sad but unfortunately very real example. A young man in his early 30’s with a wife and family was a passenger in a car when another driver crossed the center line in broad daylight, demolishing the car he was in. The crash caused him severe and permanent injuries and he could no longer work.

The guy that hit him had only 15k, the legal minimum, in liability insurance.

But when he and his family came to me I also found out that he had one of these “legal for less” policies as well. He did not have underinsurance protection on his own auto policy that would have covered him over the 15k paid by the at fault party’s insurance.

He had no income loss protection on his own policy and only 5k in medical bill coverage. His income was immediately gone and he could not afford health insurance when his 5k in medical coverage exhausted in short order.

The one time payment of 15k from the other insurance company was gone on bills he owed from the time he was hurt until it was paid.

With no income loss coverage of his own and no underinsurance, the 15k was the end of the road for him and his family where he had been making more than three times that before. In an instant not of his making, he went from working to disabled; financially healthy to destitute.

This devistated him emotionally and financially. He was no longer capable of supporting his young family. The “legal for less” syndrome cost him, his wife and their children their life as they had known it.

He couldn’t understand it. He was told when he bought the policy that he had “full coverage”, another term of art subject to interpretation depending on which side of the insurance table you are sitting when you buy the insurance.

Yes, “legal for less” is legally full (but minimum) coverage, proof of which allows you to renew your vehicle registration in this state. But as you can clearly see it does not by anyone’s interpretation equate to full protection.

There are a lot of these nominal policies out there and despite their low cost, believe me, insurance companies will take as many of these as they can write. As is obvious in the example above, the most any insurance company on either side of such an accident will pay is 15k. The young man above and his family are out hundreds of thousands just in wages over his work life, not to mention they no longer can afford health insurance.

Many believe such a thing can not happen to them until instantly and without warning it does. So don’t trade a couple hundred premium dollars for the real possibility of losing hundreds of thousands.

Sit down with your insurance agent. Get all available coverages explained to you and select the one that reasonably and best protects your family from the “legal for less” syndrome.

Labels: car insurance