California Personal Injury and Insurance Blog

Multiple Policies on 1 Car

This has come up a few times lately in my personal injury cases so I thought I would discuss it with you. Here is the scenario: Bob is driving his Aunt Sally's car. Bob is 25 and has an insurance policy. Sally is 43 and has an insurance policy as well. If Bob rear ends Paul, which policy pays for Paul's personal injury damages?

This is an interesting question and one which doesn't have an easy answer. (And one which most attorneys do not know the answer to!) The first answer is to read the policy. Most policies will have a provision explaining what happens when there is more than 1 policy in effect. The options are simple:

1. A policy may say that it is primary. This policy will pay first up to the policy limit.
2. A policy may say that it is excess. This policy will pay only after the other policy pays.
3. A policy may say that it shares on a pro-rata basis. This means that each policy pays based on its share of the limits. A few examples:

A. If each policy has a $100,000 policy limit, than each policy pays 50% of the claim.
B. If Bob's policy is $50,000 and Sally's policy is $100,000, then Bob's policy pays 1/3 of the claim and Sally's policy pays 2/3 of the claim.
C. If Bob's policy is $300,000 and Sally's policy is $100,000, then Bob's policy pays 75% and Sally's policy pays 25%.

When you are driving a friend's car, or a friend is driving your car, is pays to see which policy is going to pay for the damages if someone is involved in an accident.

The value of a good lawyer

Some people think a good attorney can just increase the value of your case. And he or she can, as I will discuss. But, before we get there, a good attorney can help you avoid wasting your time.

Case in point: attorney asks me today if his client can pursue a claim against his insurance company when the client was at fault for the accident. The answer, as every driver's ed student at Franklin High knows, is no. Uninsured motorist coverage only protects you if the at fault driver has no insurance. There is no insurance to pay you if you cause an accident.

But, this attorney was actually pursuing this claim. How much time and energy were wasted on a case that never had value? Too much.

In addition to avoiding wasting your time, a good attorney will get you more for your case. Insurance companies do not want to talk about it. But, their own reports show that an attorney can get you 30 to 70% more, on average, then you can get on your own.

How do you hire the right attorney? Besides reading my blog, you can get my free report by emailing me at hiringatty@jonathangstein.com to learn how to hire the right attorney and how that can get you everything you are entitled to after an accident.

Read the policy

I know I have said this before, but I have had a rash of phone calls lately from people with some obscure coverage questions. The questions have ranged from "Am I covered if I drive another car?" to "Am I covered if I run from the police and get in a car accident?"

My answer is always the same: I don't know. Why do I not know? Is there some character flaw? Is it because I am not that smart? Maybe. But the real reason I do not know is because I do not know what that person's specific policy says.

Most policies follow the ISO standard policy. However, not every policy does. In fact, even within an insurance company, there are two or three or four auto policies. And, some insurance companies write their own policies. When I was an adjuster for CIGNA, we had these "plain English" policies that were written to be understood by people. Unfortunately, they were so different from every other policy that no one really knew what was covered!

So, if you have a question on what is covered by your insurance policy, start with the basics: read the policy. If you are having problems with that, and most people do, then contact an attorney. And bring your policy!

Buying Insurance for the Wrong Reasons

Okay, so when you watch tv these days, you are bombarded with insurance commercials.  You hear about accident forgiveness, pet coverage, coverage if your car is beamed up by Scotty. It is amazing how many different coverages you can get for your car.

Remember, however, that car insurance is meant to cover two things: your car and any damage you cause to anyone else. Any other coverage you get is called "throw away coverage." Why? Because the insurance companies give it to you and throw away any money it costs them. Why? Because they get people to change their insurance company based on these coverages. Yes, people actually change to a new insurance company because they can get pet coverage.

Look, if insurance companies, or more importantly, insurance regulators thought it was important, it would be offered by every insurance company or even required. But it is not. It is a marketing ploy. And a bad one at that.

You do not need any insurance coverage. If you do not know what coverage you need, email me at insbook@jonathangstein.com and I will send you the Consumers Guide to Auto Insurance FREE (a $20 value).

Auto Insurance Zip Codes Matter

No, not for rating reasons. At least, not this time. When you complete your insurance application, you have to list the zip code where the vehicle will be garaged. This is information the insurance company uses.

When you move, you need to let the insurance company know. This may be a temporary move. For example, maybe you move for college. Or, your child goes off to college. You need to let the insurance company know. Maybe it is a permanent move and you have a PO Box for your mailing, but you move from zip code 12345 to 12346. It may not seem like much, but it is important.

What happens if you do not notify the insurer of your move? Your claim could be denied. The insurance company will consider it a "material misrepresentation." This means they can deny your claim and even cancel your policy.

Make sure you give the insurance company this information as the potential downside outweighs the amount of time it will take to give it to them.

Single Limit Policy

I have a friend looking for new homeowners insurance. She is changing from a major insurer to a less well known insurer, but in my opinion a better insurer. She then asked me to review the policies and explain the differences. So, I did.

Her current policy has your standard coverages - A, B, C and D. A is the house, B is the other structures, C is the personal property and D is the loss of use. I have written about these coverages before.

Her new policy has a single limit. A, B, C and D are combined into one huge limit. In this case, her single limit is $100,000 more than the current A through D coverages. Why does this matter? For a few reasons:

1. She is getting more coverage for less premium;
2. She can use her coverage in any way she sees fit. So, if she has a total loss and it only costs $300,000 to rebuild her home, she can use the rest of it to replace her personal property or rent a home. She does not have to worry about using one limit up and having extra money in another limit;
3. She doesn't have to worry about tweaking (or adjusting) her limit every few months. She has more than enough coverage now.

If you are looking for new homeowners insurance, ask your agent about a single limit policy.

UNUM Found Guilty of Fraud

This just came across my desk:

"A Boston jury has found that Unum(NYSE: UNM), the nation's largest disability provider, defrauded the UnitedStates by forcing its customers to submit false claims for disabilitybenefits to the Social Security Administration (SSA), when Unum knew that they were not eligible for government benefits.

By engaging in this fraudulent conduct, Unum imposed substantial burdens on an already overwhelmed Social Security program and caused the taxpayers of the United States to spend money to process and deny these false claims."

It has been common knowledge in the insurance industry, and the plaintiff's bar, that UNUM wasn't always playing by the rules. But this takes it to a new level. If you have a UNUM policy, you may want to look somewhere else for disability coverage.

Health Insurers Mining Data

The Washington Post is reporting that health insurers are now mining data from a variety of databases when you apply for insurance.  From the story by Ellen Nakashima:

"Health and life insurance companies have access to a powerful new tool for evaluating whether to cover individual consumers: a health "credit report" drawn from databases containing prescription drug records on more than 200 million Americans."

This shouldn't really surprise anyone. Insurance companies make decisions based on information. The more information they have, the more accurately they can underwrite. When they underwrite people accurately, the premiums charged.

Consumer groups, myself included, get upset when insurance companies conduct "post claims underwriting." Post claims underwriting is when an insurance company looks at records after a claim is filed and then decides if it should cancel the policy. Post claims underwriting is, quite simply, wrong.

So, the solution? Let the insurance companies do the underwriting at the claims stage. Insurance companies get medical records now and do this. This process just allows them to do it faster and cheaper. I just don't see the problem. 

Collision, Comprehensive and Claims - Oh My

I know I have written about this before, but it comes up fairly frequently in my practice. What is comprehensive? What is collision? Can my rates go up for filing one of these claims? So, lets start with the basics.

Collision coverage applies, if you have it, when your vehicle strikes something else and you are making a claim for damage to your car. So, your vehicle is stopped and hit by another vehicle - collision claim. Your vehicle is being parked in the garage and hits the front of the garage - collision claim. Your vehicle rolls down a hill and into a building - collision claim.

Comprehensive, sometimes called other than collision, applies, if you have it, for anything that is not a collision for damage to your car. Fire? Theft? Vandalism? All comprehensive claims.

Now, lets make it fun. Your car hits a deer. Comprehensive or collision? Clearly, this is collision since the car struck the deer, right? Well, it makes sense, but any time a vehicle and an animal collide, its a comprehensive claim. It doesnt make sense, but go with it if you strike an animal.

Why does it matter? For a few reasons. First, some people carry collision but not comprehensive or vice versa. Second, your rates can go up for an at fault collision. In California, at fault means 51% or more at fault. For a comprehensive claim, your rates cannot go up.

So, you are driving to Santa Barbara and a deer is standing in the road. You hit the deer. The accident is your fault. But, because it is an animal, it is a comprehensive claim and your rates cannot go up. That is why all of this matters! 

Insurable Interest

I was driving the other day with the radio on and an ad came on for an insurance broker. The broker, who shall remain nameless, insures hard to insure drivers. You know, tickets, DUIs, accidents, young drivers, etc.... The ad went like this: "We can insure anybody. Tickets? No problem. DUIs? No problem. Accidents? No problem. The car is not in your name? No problem."

Um, problem. There is this little concept of insurable interest. What is insurable interest? Insurable interest means that you have an interest in what you are insuring. Insurance is not gambling. Okay, this is a complicated concept. So, a few examples.

Lets say I know a 16 year old who just got her driver's license. And, she is a bit accident prone. You know the type - she walks into walls or falls down while walking. Now, I know she is going to get in an accident. Its just bound to happen. According to this broker, I could take out insurance on her car. When she gets in an accident, I would collect on the insurance on the policy I took out on her car. That is called gambling - not insurance.

The basic rule is simple: you cannot insure a car if you do not own it. If you don't own a car, you can take out a driver's policy that will cover you if you drive someone else's car.