Below is a sample Auto Insurance Policy
used to illustrate how an auto claim might be viewed and settled by the insurance company.
- What Happened?: The insured’s daughter was texting when she crossed a double line and hit another car head-on.
- Insured’s car was “totaled”.
- The other car was “totaled”.
- A passenger in the insured’s car suffered injuries of $7,500.
- The driver of the other car was seriously injured and in a law suit was awarded $750,000 by the court.
- What Was Covered?:
- The insured’s car was valued at $35,000 and was covered under Collision for the full amount minus the deductible ($35,000 - $1,000 = $34,000)
- The other car was valued at $20,000 and was covered under Property Damage Liability for the full
- Medical expenses for the passenger were covered under Medical Payments up to the limit of the policy of $5,000. This left a balance of $2,500 which became the responsibility of the insured.
- The court award of $750,000 was covered under Bodily Injury Liability up to the limit of the policy of $500,000. This left a balance of $250,000 which became the responsibility of the insured.
- Explanation: In this example, the coverage provided was substantial but the insured was still held personally liable for the deductible of $1,000 as well as the excesses of $2,500 and $250,000 beyond the policy limits for Medical Payments and Bodily Injury Liability respectively.
If the insured had a $1,000,000 umbrella policy it would have covered all but the $1,000 deductible saving the insured $252,500. The cost for a typical $1,000,000 would be approximately $250 per year.