Thursday, February 6, 2014


When I ask clients (typically at the first client meeting) what kind of auto insurance coverage they have, the response is almost always: “I’ve got full coverage.”

Or at least they thought they did.

A recent case – Robson v. Cadd Agency – points out an all too familiar scenario when folks attempt to buy auto insurance.  It goes something like this.  Purchasers tell their agent they want a “full coverage” policy.

Agent then gets some quotes for some policies.  So far, so good.  But here is where things start to break down.  Most purchasers of insurance don’t really know what a “full coverage” policy means.

At a minimum, it includes liability coverage, which covers you if you get sued.  But does it include the most valuable coverage you can buy – uninsured and underinsured motorists (UM/UIM) coverage – which protects you and your family if clobbered by a driver with no insurance or low limits of liability insurance?

Does it include medical payments coverage?  Collision coverage?  Rental coverage?  Does the policy cover your family members living in your household?  Does it prohibit a spouse or children from making a claim for injuries if injured due to the driving negligence of another spouse or child?  Does it cover your injuries if you’re smashed by a drunk driver while driving your company car?

Bottom line:  There is no definition in the insurance industry for what constitutes a “full coverage” auto policy.  It is a useless, garbage term that means NOTHING!

In the Robson case, a business owner asked her agent for a “full coverage” commercial auto policy for a dump truck.  The owner claimed she insisted on having UM/UIM coverage.  What she got was an auto policy that did not include UM/UIM coverage. 

You can guess the rest:  A collision with an underinsured driver and injuries to the dump truck driver.  When a claim was initiated for benefits under the UIM policy, it was denied.  The agent claimed that the owner didn’t want UM/UIM coverage after all, which the owner denied.

A classic “she said/he said” situation.  And a lawsuit.  The larger point here is that the model for buying and selling auto insurance is a broken one, replete with misunderstandings and misinformation.

It is a model driven by price, and purchasers essentially have little to no idea what they’re buying and what all the fine print means . . . until they’re clobbered in a crash.

And, oh, by the way – under Ohio law, purchasers have a duty to read and understand their insurance policy!  This is the most ridiculous fallacy of all.  Just try to sit down and read AND understand your auto policy without pulling out your hair or falling asleep.

Insurance companies have NO interest in educating you as to what you are actually buying, and neither do many agents.  More often than not, it’s all about “saving you money” or “saving 15% on your car insurance” and all those other useless slogans.

The only way to fight back and buy the protection you deserve is to educate yourself.  That’s why we wrote, “Fully Exposed:  How Insurance Companies are Stripping Your Auto Policy.”  It’s a quick read about many of the mistakes people make when buying auto insurance, through no fault of their own.

If you don’t properly arm yourself, it’s like brining a knife to a gunfight.  And, in the case of the insurance industry, you’re facing a howitzer. 

The book is available for free on our website.

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