DDon’t expect your auto insurance to act like life insurance if you are killed in a car accident. If your heirs get paid anything, it won’t be as much as they are likely to get from a life insurance policy.
“Dying in a car accident is just one way to die. You should always have life insurance, ”saysRobert katz , an Atlanta lawyer. “I wouldn’t plan for life insurance coverage through auto insurance.”
Auto insurance is meant to take care of your car – and help your family pay for funeral costs if you’re killed – but not much more.
“The purpose of insurance is to get you back financially to where you were before the loss,” says Tim Dodge, director of research and media relations at Independent insurance agents and brokers from New York.
Whether or not your survivors see money depends on the type of coverage you have and who is responsible for the accident.
Liability coverage: Your own liability insurance would not pay your family after an accident. If you are killed in an accident caused by another driver, their liability insurance will pay your family.
Payment is limited by the amount of coverage taken out by the other driver civil liability for bodily injury Politics. In some states, the minimum required coverage – in some places as little as $ 12,500 – would barely cover burial costs.
Medical expenses are factored into the total, reducing the potential payment.
While increasing your own liability coverage won’t help your family if you are killed in an accident, the added protection could prevent you from being sued if you cause a fatal accident.
Most drivers with assets to protect should have at least $ 100,000 in coverage. “Add-ons” for excess coverage can be purchased for not much more. Katz, for example, says he pays an additional $ 136 every six months to increase his liability coverage to $ 1 million.
“Insurance gets cheaper the more you buy,” Katz says. “They are unlikely to pay these amounts, so they don’t charge a lot for it.”
Injury Protection (PIP): Protection against injuries is available in the fault-free states, paying no matter who is to blame for the crash. Penny Gusner, consumer analyst for CarInsurance.com, says the benefits vary widely.
In Michigan, for example, your family can receive 85% of your income, up to $ 5,189 per month, in survivor benefits. The death benefit under Florida’s PIP law is only $ 5,000 – and until a recent change in Florida law, survivors saw nothing if medical bills had already consumed their coverage.
“At least there was this saving grace for families facing this type of disaster,” said Russel Lazega, a lawyer in Miami. .
Accidental death benefit: Also called Accidental Death Benefit or Accidental Death Benefit, this optional coverage pays in the event of a covered auto accident where you or a member of your family dies of bodily causes, Gusner explains. Without this coverage, your family may have to pay your death costs out of pocket.
Coverage for uninsured and underinsured motorists: If you’re hit and killed by an uninsured driver and you have this coverage, your estate will have to show that the other party was at fault to collect from your insurer, Lazega says. Your heirs could recoup your lost income and future lost income, he says.
Coverage for uninsured motorists is optional in Florida, for example, although Lazega says it’s a good idea because about 25% of drivers in the state do not have the minimum personal injury protection coverage required by the law.
Underinsured Motorist Personal Injury provides coverage in the event of death if you are killed by someone with insufficient insurance, but only up to the liability limit of your policy. (See “What You Should Know About Uninsured Motorists”.)
Go to court: Your survivors can sue the responsible driver who killed you in an accident.
If the claim exceeds the amount of insurance coverage, your heirs may take it out on the driver’s property, says Katz, who also recommends looking for other insurance policies the driver may have, such as being insured by an employer if the accident occurred while driving for work.
“You have to do it the old-fashioned way and either deal with their adjuster or take them to court,” Lazega says, adding that about half of the auto death cases he deals with go to court.
What survivors can file a claim for varies by state, says Shane Fischer, a lawyer in Orlando, Florida. A surviving spouse in Florida, for example, may charge for pain and suffering, loss of support and service, and loss of companionship, Fischer says. If there is no surviving spouse, adult children can perceive pain and suffering, lost parenting company, instruction and guidance.
Life insurance is cheaper
Any trial is a roll of the dice, and therefore depends on the responsibility of your fellow motorists.
“At the end of the day, if you want to make sure your family is insured, buy life insurance. It’s cheaper,” says Gusner.
For example, a term policy of $ 250,000 over 20 years for a healthy 30-year-old costs about $ 150 per year, according to LIMRA, an insurance trade association. (See “How to Valuate Term Life Insurance”.)
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