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What Auto Insurance Coverage Should I Buy?

Shopping for auto insurance can be overwhelming. As injury lawyers, Josh and Aaron work with insurance companies every day. In this podcast episode, they share what to look for when shopping for new car insurance coverage and ways to increase your current coverage without substantially increasing your monthly premium.

Listen here or read the transcript below. FVF’s Summary Judgment podcast is available wherever you listen to podcasts including Apple Podcasts, Spotify, iHeart Radio, and more.

Introduction: Thank you for tuning into Summary Judgment where Austin personal injury attorneys, Josh Fogelman and Aaron Von Flatern of FVF Law, discuss the ins, outs and in-betweens of personal injury cases.

Josh Fogelman: Welcome back to Summary Judgment. I’m Josh Fogelman. I’m here with my co-founding partner, Aaron Von Flatern, and we are the co-founders of FVF Law, which is a personal injury law firm in Austin, Texas. And we’re here to talk to you today to provide you some insurance coverage advice from some personal injury lawyers. This is something, when we’re talking with our friends and family, and we’re looking to give them some insight information about what coverages they should consider purchasing, would be smart to purchase so that they’re adequately protected if something unfortunate happens to them. We like to have this sort of discussion at parties and at the dinner table, things of that nature, because we’re nerds in that way. So Aaron, when you’re talking to folks and helping them understand what they need to do or should do to protect themselves, what are some of the top insurance coverages that you like to suggest they buy?

Aaron Von Flatern: Yeah, and let me just say, this is probably the most boring topic that I am personally passionate about because I am, like you said, talking to my family about it. I talked to my neighbor just last week about it, and it comes down to what happens when you don’t have enough insurance or the right kinds of coverage. It’s so frustrating for us as lawyers to be sitting across the table from a family that’s been devastated from some catastrophic accident or crash, and basically say to them, “This is it. You’re capped.” And so we’ve got some simple advice, and like you said, there’s a lot of different coverage to talk about. The ones that I think people should know about first and foremost, if you get nothing out of it besides this, it’s uninsured motorist coverage. We want you to get the maximum uninsured motorist coverage you can get, and Josh will have some time to explain what that is later.

There’s another one called personal injury protection coverage, and by the way, we’re talking about Texas law here, but you can find these coverages in a lot of states in some form or fashion. And so those two are really key. Of course, there’s the amount of your car, and people get concerned about their deductibles. We can talk about that. I’ve got tons of advice on that. It’s not as germane to this topic. What I’m most concerned about are my neighbors who are out there on bikes here in the city. I live in Austin, Texas, where a lot of people are pedestrians, and they don’t know, most of them don’t know that their auto insurance policy is covering them if someone hits them and doesn’t have enough money. So Josh, can you just break down for the listeners, how does uninsured motorist work and what is it?

Josh Fogelman: So in Texas, people that are driving on the roads, if you have auto insurance, the state requires you to carry a minimum of $30,000 in what we call liability coverage for bodily injury, and what that means is that if you’re driving around and you blow through a red light or do something careless and you hurt somebody, your insurance company is required at a minimum to pay up to that amount to cover the person that you hurt for all of their economic and non-economic losses. So that’s going to include everything from medical expenses and lost earnings to the more intangible losses like physical pain and physical impairment, and most people when they’re shopping for auto insurance don’t really understand what they’re purchasing. They don’t understand how much liability coverage they’re purchasing, and similarly, most people when they’re shopping for insurance have no clue that they even have the option to purchase auto insurance coverage that will cover them from being hurt by someone who has a minimum limits liability policy of $30,000 liability policy, or worse yet, no insurance coverage at all.

So Texas requires auto insurance carriers to offer uninsured or under-insured motorist coverage, they’re the same thing, to anybody who purchases auto insurance in Texas, and like I just said, what it does is make sure that if you’re driving around or you’re walking around or you’re on your bike and someone is careless and harms you, and they don’t have enough insurance to pay for the damage that they have caused you for those economic and non-economic losses, those medical expenses, lost earnings, pain, physical impairment, then your own auto insurance carrier is going to come in and fill that gap and make sure that there is a deep enough pocket to compensate you for any and all of those losses.

And so to that end, not only is it a critically important insurance product that everybody should purchase, but everybody should purchase as much of it as they possibly can, because Aaron and I could sit here all day long and talk to you about the hundreds of times we have talked to people who have gotten seriously hurt in a car wreck or have been hit by a car, where they’re going to end up having these long-term medical costs or these long-term lost earnings or any sort of long-term consequence, and we’re having to have a really difficult discussion with this, like Aaron said, to explain, “Hey, the person who hit you doesn’t have good insurance. They’ve got a $30,000 policy, or no policy. And unfortunately, while you did a good job of purchasing some uninsured/under-insured motorist coverage, you also only purchased the minimum amount, and so we’re looking at the $60,000 best case recovery for you,” when if you had just spent a few extra dollars each month, you could have purchased half a million dollars or more in uninsured/under-insured motorist coverage that we could have then utilized to help offset some of those short and long-term losses.

Aaron Von Flatern: Yeah, I just want to pick up on that point you made at the end there. Getting some insurance, costs quite a bit of money. If most people are looking at their budget, auto insurance is definitely on there, it’s definitely a concern. So we’re not minimizing how expensive auto insurance can be, or how tight your budget can be, but one thing people don’t realize is that once you have it, increasing it is not that expensive. To go from a minimum policy to that half million dollar maxed out, uninsured motorist policy may just be a few bucks a month. And when you’re talking about someone who’s riding their bike a lot, that can be really critical. Cars are getting safer and safer. We keep hearing that they’re implementing all of these new standards, they’ve got new air bags inside etcetera, they’re also getting bigger, you all.

Aaron Von Flatern: If you’re on a bicycle, there’s just no such thing as a small accident with a car anymore. You’re going to be in real bad shape if you have a major collision with a car and you’re on a bike. So chances are, even if the person has $100,000 of coverage, they probably don’t have enough to cover a full surgery if you need it, a brain bleed, something serious like that. They’re probably not going to have enough coverage for it. And one thing I want to point out too is we talk about uninsured motorists a lot because it comes up in our practice, and something that we don’t really talk to our clients as much, because we represent plaintiffs, is the need to get as much liability insurance as you can afford. Josh, you and I had a case this past year in which someone was a quadriplegic and they were hit by a professional, somebody who had a really good job, who had worked their whole lives and saved up some money, but not a ton of money.

And they had an insurance policy that was, I would say decent, but compared to a quadriplegic case it was just absolute peanuts. And so you can imagine how bad that person felt, they didn’t want to have ruined someone’s life and not have anything to compensate them with, besides this tiny policy compared to their injuries. And so that was one of those eye-opening experiences for me, where I said, it helps people to have these bigger limits, it helps defendants too. Defendants don’t necessarily want to be the bad guy. They want to be the person with enough insurance to cover the harms and losses that they created, that’s why you buy insurance. So our only point here is, buy enough of it. And Josh, I haven’t talked about this Personal Injury Protection Coverage, I think it’s a critical coverage that we ought to mention before we close out here. First of all, what is it and why is it, and how much people should people have?

Josh Fogelman: So Personal Injury Protection is kind of a unique auto insurance product, and like uninsured/underinsured motorist coverage, Texas requires insurers to offer this product, but you can always reject it in writing, like UIM, like uninsured, underinsured motorist coverage policy. But Personal Injury Protection, which we often call PIP, P-I-P in sort of legal lingo, when we’re talking about clients, is what we call a no-fault insurance coverage. So whereas liability coverage is what protects you if you cause an accident that harms somebody, and uninsured/underinsured motorist coverage is what we call a first party insurance, that only comes into play if somebody else hurts you and they don’t have enough insurance to cover what they did wrong. PIP is unique in that if you are in a wreck and you get hurt, it doesn’t matter who caused the crash, you could have fallen asleep at the wheel and run off the road and crashed into a tree. The fact that you were in a vehicle that’s covered and you crashed the car and got hurt is sufficient to trigger that coverage. It does come into play if someone else hurt you. It’s also available but it will also come into play if you were the one who caused the crash.

The unique thing about PIP, aside from it being what we call this no fault coverage is, they’re oftentimes sold in somewhat small amounts. Generally speaking, auto insurance carriers will only offer them in $2500 coverage amount or $5000 or $10,000 coverage amount. In the purpose of PIP, it’s not really there, like your UM or UIM, underinsured/uninsured motorist coverage policy is there to take care of long-term medical costs and long-term lost earnings and physical pain, physical impairment. PIP is a very specific product that is there to help make sure that you get hurt and you start getting inundated with medical expenses, or if you can’t work in the short term, you have quick access to what should be no questions asked money. Now, there’s a similar product out there that’s worth mentioning, it’s called Medical Payments Coverage, we call it MedPay, and it is also what we call a no-fault coverage. There is a little bit of a distinction between those two products. First of all, medical payments coverage or MedPay is a little bit limited in what it will cover, but also MedPay is an inferior product because if you end up using your MedPay and you also recover money from a person who harmed you, who caused the crash that hurt you, then you end up having to pay some of that money back to your own auto insurance carrier, whereas PIP doesn’t have that right.

And I know that’s really technical, but that doesn’t really make a lot of sense. You can read more about it on our website or just take away from this that if given the choice between the two, PIP is a superior product that’s also not particularly costly, and like uninsured/underinsured motorist coverage, we highly recommend that you buy as much of it as you can possibly afford. One of the things that is unfortunately true with auto insurance coverages, you don’t really know you need it until you need it. And when you need it, it’s too late. And just by making a phone call, working with an insurance agent or getting on and kind of understanding what these different products are and planning ahead for 10, 12, 15 bucks a month, sometimes, you can put yourself in a substantially better position to be taken care of financially in the event you get harmed, primarily by somebody else, in a way that you will be thanking yourself for later.

Aaron Von Flatern: Yep. Big picture-wise, uninsured motorist coverage is all about getting, put back together, making things right, making things whole again. PIP coverage is really about cash flow, right, Josh? It’s about the fact that they’re going to pay you this coverage as you go. It covers lost wages, it covers medical bills, and so that generates money at a time when you may not be able to work, for example, or at a time when if you’re using your health insurance for treatment, you’re facing lots of co-pays, $20 every time you go for physical therapy. So PIP can be this really helpful coverage, and most lawyers, at least our firm, doesn’t charge a fee for the PIP coverage. We go out and get it for you, we pass that check to you and it just helps a little bit. It’s one of those things that people don’t really know anything about it until they get that check and then they’re really glad that they selected that coverage. And this goes to this final point, which is, insurance agents, they get paid about the same amount of money, whether they sell you a whole lot of coverage or just a tiny bit, they get paid by the policy, usually their commission.

So oftentimes you’re going to get an agent on the phone who just really doesn’t care about your circumstances, they’re not asking you, “Are you a pedestrian on a bike a lot of the time?” And they’re not asking you about some of your assets that you may be trying to protect. What they’re trying to do is sell the policy. So if they ask you that question, “Well, do you just want the cheapest coverage available to you?” It seems like a logical, “Yes, well, of course, I want to save money,” but take a minute and try to study this decision, because it’s one of those that we all put on autopilot, but you pay insurance for your whole life. We’re talking about tens of thousands of dollars that you pay for this product, whether you buy a lot or a little. And so take it seriously, and I hope this podcast has helped you with those decisions a little bit. Josh, it has been fun doing this with you, this has been another fun episode of Summary Judgment, even though we’re talking about insurance.