What You Don’t Know About Your Auto Insurance

Ever read your auto insurance policy? If your answer is no, don’t feel bad, 98% of the car insurance buying public has never read their insurance contract. That’s right, it’s a contract between you and the insurance company. The only thing is you don’t get to negotiate the terms. You pay for the coverage, sign the paperwork, and the “insurance” company promises to uphold the contract. By the way, in most cases, the insurance company does indeed uphold its end of the bargain. The problems happen when you, the consumer, do not understand exactly what the contract you signed really says. Let’s do a little case study of a potential insurance claim. Buckle up…..here we go!

What Oregon Drivers Need to Know

Put yourself in your car driving on a sunny afternoon in Bend Oregon. Your driving down the parkway when some kid takes off on a bike across the highway right in front of you… you panic stomp on the break and feel the car skidding sideways and hit the car next to you, he did the same thing as you. You wince as you hear the crunch of the metal to metal. As if in slow motion you watch the teens body fly up over the hood of your car and land between you and the other guy. Wham! You fly forward, your seat buckle locks and you smash into the steering wheel as the air bag deploys into your face. You can’t see a thing, but you can hear screaming and the screech of sirens. Someone has their hand on your shoulder telling you not to move, they have already called the police, and the ambulance is on its way. The only thing you want to know is if the kid is ok. You keep asking that question, no one is answering you. You’re scared, you try to move and the hand pushes you down. You wait for help.


Fast forward you’re in the hospital, with the kid. Thank God he’s alive. Broken arm, smashed ribs, and a broken leg, with a concussion. But he’ll be ok. NOW what, how do you pay for your hospital bills, and your totaled car. Yeah, the second hit that it threw you into the steering wheel. Someone hitting you at 40 miles an hour. Their car did not stop until it hit your car!


1. Will your car insurance pay for a replacement car? Yes and no.


It depends on what you bought or did not buy. Here is how the insurance contract you signed will respond. You can rent a replacement car until you get a new one. The insurance company will only buy you a new car if you carry collision insurance on your old car. Mind you the insurance company will calculate the (Actual Cash Value of your car) That means the cost to buy a new one less the depreciation. If you are driving an older car, you may have removed the collision coverage (to save money) because the car was fully depreciated.


2. Will you have enough car insurance to pay for your hospital bills? Maybe.


Most auto insurance policies provide $15,000.00 in medical expenses for you. In Oregon, your medical expenses are under the PIP (personal injury protection) in your policy. If you go over the $15,000 dollars your major medical coverage will pick up after that if you have coverage through your employer or on your own. If you don’t have major medical then you can purchase a higher limit for a small increase in premium.


3. Will your car insurance pay you for lost wages?


Yes, this coverage is part of the $15,000 PIP benefit, I mention earlier. By the way, it is not in addition to the $15,000 medical coverage its included in the $15,000 PIP limit. This benefit will kick in after 14 days if your injury prevents you from returning to work. On the 14th day, you will receive up to 70% of your wages up to a maximum of $3000 a month for 52 weeks.


In Oregon PIP benefits include limited coverage for loss of earning, funeral expenses up to $5,000, essential services, like house cleaning, yard work help, and child care.


If you think about it, you are asking PIP to cover a lot of expenses, again you can increase your PIP protection for a small premium increase.


4. Will my auto insurance pay for the medical bills of someone I injured? Yes.


In Oregon, the minimum Bodily Injury liability limits you can buy are $25,000/$50,000. The $25,000 is per person and the $50,000 if per occurrence. In short, the insurer will not pay more than $50,000 for one accident and no more than $25,000 per person if you injure them in an accident. In most cases, the minimum limits are woefully inadequate. At Bancorp Insurance we will not sell you less than $100,000/300,000 Bodily Injury liability limits. More on this later in this document.


5. Do you have enough insurance to pay for damage to property of others?


Maybe. In Oregon, the minimum property damage limit is $20,000. If the other car is worth $30,000 and you totaled it you don’t have enough coverage. This coverage can add up fast in our case study you may have had to pay for the damage to the car next to you, that you skidded into and the kid’s bike. If he had a nice carbon road bike from a local bike shop, the starting price on that bike is about $6000.00. They can cost double that depending on the style make and model. Again this is an area where you can buy more coverage. At Bancorp, we normally sell $50,000 in property damage.


6. What happens if the kid you hit sues you for negligent driving?


You could be sued. In our case study, the kid was a track star athlete here in Bend. He had a full ride athletic scholarship to the University of Oregon. His lawyer is suing you for the loss of that scholarship, lost earnings, he may have had due to product endorsements and all his medical bills incurred for the next two or three years. Ouch! Here is where the Bodily Injury Liability Limits kick in. You can see if you have the state minimum than the maximum coverage you would have, would be $25,000 per person. Yes, you have the $50,000 per occurrence, but you also had to pay some medical bills to the guy in the car next to you, that you slid into. What happens when the $25,000 runs out and the judgment is against you for $1,000,000? You find a way to pay the $750,000 out of you own pocket!


TIP: You can buy an umbrella policy for about $300.00 a year that will pay the $750,000 judgment against you up a $1,000,000 or more should you want to purchase this type of coverage. Yes, I know more than one person who has used the entire limit under their auto policy and breathed a sigh of relief because they had a personal umbrella policy.


7. Will your car insurance company hire you a lawyer?


Yes, they will defend you against lawsuits. But again only up to the Bodily Limit Liability limit in your policy. Once you have hit that limit your defense costs will be on you. Again if you have a personal umbrella policy, the umbrella carrier will take over where your auto policy left off.


Let me make it perfectly clear I’m not a lawyer, so contract law is not my specialty, but insurance is, and I have read every insurance contract I sell. Why because I’m insurance professional and I consider it not only my job but my duty to you the customer to tell it to you straight.


I feel so strongly about my position as a consumer advocate, I want to offer to review your auto policy with you absolutely free! Just fill out the form on this page and we can get started!

Why Would You Ask For Any Less Respect or Time?

Ask yourself this one question – Why would you only spend 15 minutes to protect the two largest financial assets you own?

Bancorp Insurance thinks you deserve more. You deserve to understand your protection. We guarantee you will be able to sit down with a knowledgeable, well-trained, licensed agent, someone who cares about you and your financial future.

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