Oh goody, an insurance article. This should be a barn-burner.
We’ve all seen the commercials. The guy from that old-school HBO prison show personifies Mayhem in the form of a tree, or a basketball hoop, or an overfilled cooler. Something crazy happens to some poor sap who is then left with a damaged vehicle, some serious injury, or both. And at some point toward the end of the commercial, Mayhem reminds us of that old proverb; “If you’ve got cut-rate insurance, this could happen to you.”
Those commercials are great, right? They’re creative, they’re funny, and they hold your attention in a way that few advertisements do anymore. As an added bonus, they also don’t involve annoying British lizards or dumpy cartoon Generals. But more importantly, that little tagline at the end should really strike a chord. If you have cheap, minimum-limits insurance, or Lord forbid you don’t have any insurance, you’re exposing yourself to serious liability; liability that can follow you around for a very, very long time.
So this is my scary, ghost-story blog post. Much like the old Dickens tale, I want to take you through a few too-common scenarios that people face when they don’t take their insurance coverage seriously. Go pop some popcorn and get ready for a wild ride!
Scenario 1. You hit someone else – you don’t have insurance and neither do they.
For our first fright-fest, imagine with me that you’re driving to work. As you approach a red light, you reach for your coffee and knock it right into the floorboard. In slow motion, you watch as coffee splashes all over the seats, the console, and the formerly-pristine upholstery. As you contemplate the life decisions that have led to your spilling coffee all over your car, you crash into the person in front of you.
Now, liability here is clear. It’s your fault, really no debate about that. But here’s the thing; in this nightmare scenario, you don’t have insurance and neither does the person you hit. So what that means is that there’s no coverage to be had; no medpay, no UM, no UIM, and no liability. Nothing.
So when the victim of your negligence decides that recovery is in order, they’re not going to look to an insurance company; they’re going to look to you directly. That probably means a lawsuit and a civil judgment that could stick around for twenty-plus years of your life. Looked at another way, for a quarter of your life (if you’re lucky) you’ve got this cloud hanging over your head, and whatever you’ve got - outside of your judgment exemptions, of course - is subject to being snatched away by the judgment creditor. Whether it’s cash, a boat, or a vacation home, you could lose it at a moment’s notice, all because you didn’t want to pony up for car insurance.
TL;DR version – You end up broke, and the person you hit will probably end up broke and injured. Nobody wins.
Scenario 2. Someone hits you – they don’t have insurance and neither do you.
Second horrorscape; you’re sitting in traffic, minding your own business, when some dodo behind you spills their coffee, loses focus, and rams into your car doing 35 miles per hour. In the same bitter twist of fate as before, neither party has insurance.
Now, you’ve got a long road ahead of you. In order to recover anything you’ll most likely have to file a lawsuit against the person who hit you. Finding a lawyer, by the way, will probably be difficult in this case since there’s no insurance coverage to recover against. So you’re filing your lawsuit, going through to trial, getting a judgment, and then trying to enforce said judgment. You may recall from our judgment enforcement articles that doing so can be difficult; your judgment debtor has pretty wide latitude to claim exemptions, and going after what’s left can take a lot of sleuth work over a lot of years. In the meantime, you’ve most likely got medical bills piling up, with an oft-attenuated likelihood of ever getting them paid.
TL;DR version – You’re hurt and broke, your credit rating is probably taking a hit, and you’re going to have to keep tabs on the person who hit you for decades in hopes of ever getting any money out of them.
Scenario 3. Both parties have minimum limits coverage.
Final nightmare; you’ve got the minimum limits of coverage, which as we know in North Carolina is $30,000 per person, per accident. The other person has the same minimum limits coverage.
This scenario is going to look a lot like the previous two, except that there’s a little bit of coverage in play. The fun stops, though, once you hit your (or their, as the case may be) coverage limits. Now, even minimum limits can seem like a ton of money, and in some cases it is. But if you’re dealing with serious injuries, $30,000 might not even cover your initial hospital visit. Once you hit the coverage limits, you’re back to square one and your recovery options are limited to the defendant’s individual assets. This normally spells disaster, and if you also have minimum limits then you won’t even have the possibility of UIM coverage to bail you out.
Listen, the lesson here is simple. We’ve all thought to ourselves that a car accident won’t ever happen to us, and I hope it never does. But if the worst were to happen, the quality and amount of your coverage not only can, but will, change the course of the rest of your life. That sounds dramatic, but I’m as serious when it gets when I say this. Your coverage is hugely important.
Get good auto insurance and pony up the few extra bucks per month. If you need to talk to a good insurance agent, give me a call. I know plenty of ‘em.