Tuesday, July 10, 2012
HOW “INSURANCE COMPANY MATH" ALLOWS OHIO AUTO INSURERS TO DILUTE OR WIPE OUT YOUR POLICY
I can prove to you with simple math why your “full coverage” Ohio auto insurance policy is one sided and will leave you scratching your head AND possibly owing thousands in medical bills after a crash. More importantly, after you realize how “insurance company math” works, you can fix your policy with one that will protect your family.
SIMPLE MATH VS. INSURANCE COMPANY MATH
SIMPLE MATH EXAMPLE NO. 1: 50 + 50 = 100 (Any second grader knows this)
INSURANCE COMPANY MATH: 50 + 50 = 50
Huh? Let's see how a real world example of this fuzzy math does a real number on your "full coverage" auto policy after a crash.
A driver turns left in front of you, putting you in the hospital and on the surgeon’s table for numerous fractures. The driver had $50,000 in liability coverage. You purchased a “full coverage” auto policy with uninsured and underinsured motorists (UM/UIM) coverage of $50,000.
Assume your claim is worth $100,000. Simple math would tell you that you can collect $50,000 from the negligent driver’s insurance company AND $50,000 from your own insurance company under your UM/UIM coverage, right? (After all, this is why you bought UM/UIM coverage – to make a claim under your own policy/UM/UIM coverage if the driver had no insurance or not enough to cover your injuries).
Wrong. Your “full coverage policy” has fine print language prohibiting you from collecting a penny of your $50,000 UM/UIM coverage unless you had more UM/UIM coverage than the driver who hit you had in liability coverage. Perfectly legal in Ohio.
Result: You collect only $50,000 total – half of what you’re entitled to. And you collect NOTHING from your own insurance company even though you paid a separate premium for $50,000 in UM/UIM coverage.
SIMPLE MATH EXAMPLE NO. 2: 50 + 100 = 150
INSURANCE COMPANY MATH: 50 + 100 = 100
Explanation: Again, the negligent driver had $50,000 in liability coverage. Let's assume that you bought $100,000 in UM/UIM coverage and that your injury claim is worth $150,000.
Result: You can only collect $100,000 – $50,000 from the negligent driver’s policy and $50,000 from your own policy, even though you paid a separate premium for $100,000 in coverage. Your insurance company gets to subtract the negligent driver’s $50,000 from your $100,000 policy. You’re now shorted by $50,000 on what you deserve on your Ohio personal injury claim. Again, perfectly legal in Ohio.
SIMPLE MATH EXAMPLE NO. 3: 100 + 100 = 200
INSURANCE COMPANY MATH: 100 + 100 = 100
Explanation: Assume the negligent driver also had $100,000 in liability coverage, you bought $100,000 in UM/UIM coverage, and your injury claim is worth $200,000.
Result: You can only collect $100,000 from the negligent driver. You cannot collect one penny from your “full coverage” $100,000 UM/UIM benefits because your fine print Ohio auto insurance policy says that you have to have more in UM/UIM coverage than the negligent driver had in liability coverage.
Again, you only get half of what you’re entitled to, and your own insurance company avoids paying anything, despite the fact that you paid a separate premium for $100,000 worth of UM/UIM coverage!
Only an insurance company can get away with this “rip-off math,” legal in Ohio since 1994. Is there any way around all the subtractions in your policy? Not by switching insurance companies. Every insurance company in Ohio has provisions permitting “rip-off math.”
There is only one way to protect yourself and your family and bettering your odds or defeating this fine print math altogether. Buy at least:
(1) $250,000 OR $500,000 worth of UM/UIM coverage, OR (2) a $1 million “umbrella” policy that includes $1 million in UM/UIM coverage.
Your first reaction might be: “I can’t afford $250,000 or $500,000 in UM/UIM!” My guess is that you would be wrong. For less than $150 PER YEAR, you can probably increase your UM/UIM to $250,000 or even $500,000.
That’s less than $13.00 per month. You probably have almost that much in your spare change piggybank.
So let’s see how “insurance company math” works when you buy higher levels of UM/UIM coverage.
SIMPLE MATH 50 + 250 = 300
INSURANCE COMPANY MATH: 50 + 250 = 200
Explanation: Assume you bought $250,000 in UM/UIM and the negligent driver had $50,000. Assume your claim is worth $200,000.
Result: You can collect $50,000 from the negligent driver’s policy and $150,000 from your own policy, for a total of $200,000. By buying higher amounts of UM/UIM coverage, you’ve now been made whole for all of your losses. And if your claim was worth $250,000, you could collect $50,000 from the negligent driver, and $200,000 from your UM/UIM coverage, for a total of $250,000.
So there IS a way to defeat “insurance company math.” By spending $150, you’ve bought $150,000-$200,000 additional protection in our last examples. If you can’t afford the additional $150 per year, that’s understandable. But now you know how the auto insurance game, and your policy, is rigged. And as you can see, THEIR MATH doesn’t add up to protecting you!