INSURANCE CORNER: Look at your automobile policy to be sure what it covers

Let's take a look at your automobile policy and see what those coverages really mean.

The first coverage listed on your policy is bodily injury liability. So whose body does it protect? This is a third-party coverage that protects you if you are negligent in an accident. Who does it protect you from? It protects you from lawsuits/claims from other parties who are injured in an accident you are responsible for. These other parties could be drivers and passengers in another vehicle or a pedestrian.

Fault is determined usually by the insurance companies that insure the vehicles involved, not by law enforcement personnel that might be called to the scene of the accident.

If you receive a ticket, however, for following too close or careless driving, that is an indication you are at fault.

This coverage is mandatory in the state of Georgia. The minimum limits in the state are $25,000 per person and $50,000 per occurrence.

This means your insurance company will pay up to $25,000 to reimburse a third party for medical bills and related nonmedical issues such as pain and suffering as a result of the injuries. The maximum the policy will pay is $50,000 for all third parties injured in the accident.

So if there are four occupants in a car you hit and each have medical and related injuries of $25,000 each, your insurance company will prorate the $50,000 among those presenting a claim. So what about the remaining $50,000? You could be liable personally for the remaining $50,000. If the injured third party brings a lawsuit against you, the court can decide your assets must be liquidated to reimburse the injured third party. This could include the equity in your home or any bank accounts you may have.

What do you need to do to protect yourself? The first thing is to have your company or agent review your insurance policy and your assets to make sure you are properly protected.

I have stressed this in past articles, but for most people the cost to increase coverage from the minimum to $100,000/$300,000 is not much compared to the consequences. Have your agent or company give you a quote to increase the coverage. If you do not have any young drivers on the policy, the annual cost may only be $30 to $50 per vehicle. If you have young drivers rated on the policy, or your driving record has some blemishes on it the cost may be more. But the higher the risk the higher the cost.

Recognize that cost does not override coverage. Fit the proper coverage into your budget.

This story was originally published December 29, 2015 at 7:19 PM with the headline "INSURANCE CORNER: Look at your automobile policy to be sure what it covers ."