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Maximizing your automobile insurance coverage

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One of the most common problems individuals face is insufficient automobile insurance coverage. This is because people often believe that "full insurance coverage" is enough coverage.

Minnesota law requires that we all buy no-fault, liability, underinsured and uninsured motorist coverage. But, what does this mean and how much should you have to protect you and your family? Here are four things to keep in mind when you renew your automobile insurance coverage with your insurance agent.

1. Stack your no-fault benefits. This will allow you to multiply the amount of your no-fault benefits by the number of cars in your family.

Under the Minnesota "No-Fault Act," medical expenses, wage loss and other expenses such as housekeeping services, will be paid by your own insurance company, regardless of who is at fault for the accident.

Minnesota law requires a minimum of $20,000 in total medical expense coverage and $20,000 in total wage loss coverage. Medical expense coverage pays for doctor visits, hospitalization, chiropractic treatment, prescriptions, and mileage to and from medical care appointments, among other things. Wage loss coverage pays for the time missed from work because of an injury caused by the accident (and verified by a doctor), as well as time missed from work to obtain medical treatment. Under certain circumstances and criteria, wage loss coverage may also pay for housekeeping and related services when an individual's injuries prevent that person from caring for their home and/or yard, and a doctor verifies the injuries. On the typical automobile insurance policy, however, the insurance company is only required to pay 85% of your gross wage loss income, up to a maximum of $250 per week. For most people, this isn't nearly enough to cover one week's worth of wage loss.

If you have two or more vehicles insured with the same company, you can "stack" the policies to increase your medical and wage loss coverages. Thus, for example, if you have three vehicles and have elected to stack all three policies, you would have $750 in weekly wage loss coverage, $60,000 total wage loss coverage, and $60,000 total medical expense coverage.

2. Increase your underinsured and uninsured motorist coverage to at least $100,000.

Another common problem is an at-fault driver who doesn't have any insurance or who doesn't have enough insurance.

Underinsured ("UIM") and uninsured ("UM") motorist coverages protect you and your family when another person causes an accident and that person does not have adequate insurance coverage (or no insurance coverage) to compensate you for your losses. The only way to ensure that you are compensated fairly is to obtain the protection yourself. It is a good rule of thumb to carry at least $100,000 in UIM and UM coverage. Obviously, the greater the coverage, the better you are protecting you and your family.

Also, if you have umbrella coverage, you must specifically request UIM and UM coverage under your umbrella - a UIM and UM endorsement. Otherwise, you may not get the full benefit of the additional coverage and will be left with only the UIM and UM coverage limits contained within your underlying automobile liability policy.

3. All vehicles in your household should have insurance policies written with the same named insured and the same limits for each vehicle.

Under Minnesota law, a family member can be limited to the insurance coverage on a vehicle the family member is occupying at the time of the accident, even though another policy covering the family member has higher limits. In those cases, injured family members are deprived of the coverages they purchased because they are considered to be an "insured" on the vehicle they were in at the time of the accident. This can be avoided by making sure that the same family member is listed as the named insured on each vehicle or that all vehicles in the family have the same limits.

4. Purchase optional no-fault coverage for your motorcycle.

No-fault coverage for motorcycles is optional. If you have a motorcycle, you may want to consider purchasing this optional coverage.

The Minnesota "No-Fault Act" limits no-fault coverage for motorcycles in two ways: (1) A motorcycle itself is not a "motor vehicle" for purposes of the No-Fault Act. Thus, if the accident involves only the motorcycle, the occupants of the motorcycle who are injured do not have a claim for no-fault benefits because there has not been an accident involving a "motor vehicle." (2) If a motorcycle is struck by a car, one might expect this to be a motor vehicle accident giving rise to a no-fault claim. However, the No-Fault Act explicitly provides that, even when occupants of a motorcycle suffer injury in an accident involving a motor vehicle, such injuries do not "arise out of the maintenance or use of a motor vehicle" for purposes of the No-Fault Act.

Unfortunately, injuries, medical bills and wage loss may be greater to the occupants of a motorcycle. As such, the cost of purchasing optional no-fault insurance may be worthwhile and provide additional "peace of mind" if you like to ride.

Although we are not insurance agents, we have reviewed many insurance policies for clients during the course of our practice. If you have questions about your current automobile policy or policies, please give us a call and we would be happy to provide assistance.

KC is a trial lawyer with Hellmuth & Johnson, PLLC, and Chair of the Firm's Insurance Defense Practice Group