One of the good things to come out of the Oregon Legislature last session includes a package of changes in auto insurance law that favor consumers. The biggest change, HB 3086 (for law geeks, here’s the full cite: 2007 Or Laws Ch 782; amending ORS 742.450, 742.502, and 742.504), ended a horrible practice by the insurance industry. In the past, when one member of the same household caused injury to another household member, most policies provided that the injured person could recover no more than the minimum limits of insurance, even if the family brought higher limits insurance. So if Dad, while driving home, took his eye off the road and crashed, even if his child was horribly injured and Dad bought top limits insurance, the child would only recover $25,000, the minimum limit amount.
That was an unfair provision because a family that pays for insurance should get the full benefit of the coverage that they purchase. Under the new law, the family gets the full benefit of the policy amount that Mom and Dad bought.
The change was part of a package of changes that allow consumers the value of what they purchase. If you buy higher limits insurance—and you almost always should—that insurance should protect family members. The new law applies to insurance policies issued or renewed after January 1, 2008.
So when you renew your policy, the other thing to do is to check on your limits of insurance. Consumers often assume that minimum limits are cheapest. When you go to renew, check your limits in two categories: 1) liability; and 2)UM/UIM (underinsured/uninsured). The minimum limits are $25,000, and while that is generally enough insurance in the event of a minor-injury crash, it’s inadequate in a situation in which the injuries are permanent or someone needs major medical care.
Here is the thing that most consumers aren’t told. The next levels of insurance are usually much cheaper than the first level. So, for example, it often costs only a little bit more to insure yourself and your family at $100,000. The additional insurance is important in two situations. First, if you have gotten a little ahead in life, you don’t want to put your money at risk. Higher limits protect your assets. Second—and this is actually more important—when you get in a crash with an uninsured or underinsured driver, your higher-limits underinsured/uninsured coverage fills the gap. Yes, this means taking extra responsibility to protect yourself against uninsured/underinsured drivers. But the thing is that adequate coverage for you and your family is worth the extra expense.
David F. Sugerman
Paul & Sugerman, PC