Three things to consider when buying car insurance

​I deal with insurance companies all day.  I sue people who are insured, and I sue insurance companies themselves when necessary.  That's pretty much what I do as a personal injury lawyer.

So, I know a thing or two about insurance, and in this post I'm going to share with you how I buy my car insurance. 

(I won't share my opinions about which specific insurance companies you should and shouldn't use here, but I will tell you this:  you're usually better off using the big insurance companies.)

First thing to know:  your car insurance consists of three different "Sections" - A, B, and C - and then you can purchase additional endorsements or modifications.

Let's explain the different sections first.

Section A is your coverage for "Third Party Liability".  In other words, if you are responsible, or liable, for a collision, and someone else, a third party, is injured, or their property is damaged, this is what pays for that.  Most people carry a million dollars in coverage under this section.  That's usually enough, since most of the time an accident you cause is not causing more than a million dollars in damage or injuries.  It is mandatory that you have at least $200,000 in coverage.  Based on how often I sue people for more that $200,000, I would say that is not enough.

Section B is your coverage for "Accident Benefits".  These are mandatory too.  They don't cost much compared with Section A.  If you are injured in a collision, no matter who is at fault, your Section B coverage will pay for medically necessary treatment for two years after the accident.  I talk more about the coverage in this post.  The safer your car is, the less you pay in premiums.  My family has an old SUV and an older compact sedan.  I pay almost double the section b premiums for the little car, because I'm more likely to be injured if the little car is in a smash up.

Section C covers you for loss or damage to your own property, but it's optional coverage.  In other words, if you are in an accident and you pay Section C coverage, your insurance company will pay for the damages to your own vehicle.  If you were at fault, you will have to pay a deductible and then your insurance will pay for the rest.  (You can decide when you buy your policy how much deductible you will have to pay - the smaller your deductible, the bigger your premiums.)  If you were not at fault, your insurance company should pay to repair your vehicle and shouldn't require you to pay a deductible - but this might depend on the fine print in your policy, and then your insurance company can go after the at-fault party's insurance to pay them back.  You have a bunch of options how much Section C you buy.  You could buy coverage for "all perils", or "collision or upset", or "comprehensive", or other "specific perils".

On top of these sections, you can pay for other coverage.  Like, you could pay extra to have your insurance cover rental vehicles, or pay extra to ensure you have insurance for vehicles you rent (so you don't have to pay the rental car insurance prices). You can get all kinds of things - that's up to you.

Okay, so, here are my top three things to consider.

3. Do you need Section C coverage?  Maybe not...

If you chose not to get Section C coverage, they sometimes call that "liability only" or PL and PD (personal liability and personal damage).  If you get in an accident, and it was your fault, no one will help you pay for your vehicle.  Skip Section C coverage only if your vehicle isn't worth much (like my old compact sedan) and you won't get much for it anyway.  If you get in an accident and it wasn't your fault, sell your damaged vehicle for parts, or pony up and fix it yourself.  (Or, drive it around with dents now, if it's still roadworthy.)

If you get in an accident and it wasn't your fault, the third party who caused the accident should pay for your damages.  But, this can take a while, and the other party (or their insurance) may or may not be reasonable.  They don't have a contractual duty to act in your best interests, after all.  They may say they won't pay you anything, or deny that they were liable.  So, you may have to decide if you will be okay with your car being junk if it gets damaged and maybe not getting any compensation even if it wasn't your fault if you decide to opt out of Section C coverage.

I opt out of Section C coverage for my old compact sedan because it isn't worth much (and I might know a good lawyer who can help me recover from an at-fault third party!  (That might be me.)). But you might not want to opt out even if your vehicle isn't worth much if you only have one vehicle and you rely on it.

2. Do you have enough Section A coverage?  Maybe not!

If you cause a collision, Section A coverage means you don't have to pay if you get sued for less than that amount.  I said early that a million dollar coverage is probably enough, and $200,000 is probably not enough.  For me, I'm not comfortable with "probably" enough.  I see the results of enough motor vehicle collisions that I drive pretty defensively.  But, what if I don't see a kid who rides her bike onto the road in front of me and the results are devastating?  If I'm even partly at fault, a lifetime of lost income and expensive treatments could make my share more than a million dollars.  Any amount that I am liable for over my Section A coverage I have to pay for out of my own pocket.  A claim bigger than your Section A limits could leave you without legal coverage, and trying to defend yourself in court, or hiring your own lawyer you'd have to pay with a retainer.

For me, I want more than a million dollar coverage.  For me, getting two million dollars in Section A coverage for my jalopy only cost about $40 more a year. I feel like it's worth it to get at least that much more coverage, for me. Before I had a family (you know, when I was 20 years old and didn't have much money) I might not have felt it was worth it to pay anything more than I had to. Should you get more coverage? Give it some thought.

1. What if the at-fault third party doesn't have enough coverage?  Getting a "Family Protection Endorsement".

Okay, here's my number one tip:  Get extra protection against people who are under-insured. I'm going to paint a bad picture here, but this is the sort of thing I see a lot, so I worry about it. Let's say you are driving your family along in your car. You've got a full car. Four kids, let's say. Minding your manners on the road. A large truck is being driven erratically, blows through a stop sign and plows into your car. You're not at fault, but everybody is badly injured.

You sue the truck driver and/or truck owner and find out the truck was insured for the minimum legally required amount of $200,000.  Or, worse still, the truck wasn't insured.

There were 6 of you in your car.  $200,000 isn't going to cover everybody's damages. Not even close. Your only option is to go after the truck driver personally. Turns out they have a heart attack a year later and die, and they lived paycheque to paycheque. There's nothing left for you.

It's a bad scene. BUT, IF YOU HAD A FAMILY PROTECTION ENDORSEMENT you are still covered. It's also called SEF 44 coverage, and what it means is your insurance will cover you if someone else is at fault and they were under-insured or not-insured.

I pay a little more to get more SEF 44 coverage.  If someone who is under-insured injures my family, my family is more protected.

Consider asking your insurance provider about SEF 44 coverage, or a family protection endorsement. It is usually inexpensive (because they're rarely claimed) and it might be worthwhile for you.