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should i call my insurance company after an accident

This article is the third of a three-part series on car insurance. The first two articles in this series are State-Minimum Car Insurance Is Not Enough and Full-Coverage Car Insurance Is a Myth.

At Negretti & Associates, we are asked frequently, “Should I call my insurance company after an accident and it wasn’t my fault?” People often worry that if they use their car insurance, their rates are going to go up.

We tell everyone uniformly that yes, they should contact their insurance companies. There are laws in every state that prevent insurance companies from raising your rates if you are not at fault for an accident and you dip into your own policy. That would be penalizing you for using the policy that you pay for — and contrary to logic. More important, it cannot happen by law.

Regardless, many people live under the impression that they shouldn’t use their insurance, because their premiums will go up, and their insurance providers will seek to recover the amount of the previously filed claim.

Dark Realities and Seedy Underbellies

While all of the above is true, there is a dark reality that you should be mindful of. I have worked with insurance companies long enough to know how the insurance industry works. I have heard countless stories from people who have not been at fault for accidents, and all the sudden there is rate review of their premium, or they are denied coverage the next time their premium comes due.

In essence, the insurance carrier doesn’t want to cover them anymore. This isn’t necessarily stated anywhere in the claim file that this change was due to an accident claim. But it becomes quite clear that this is what is happening.

There is a seedy underbelly in the insurance industry that does do these sorts of things to affect policyholders in the event that claims are made, whether they were at-fault in a claim or not.

You Paid for the Insurance, So Use It

Knowing that your insurance company might eventually raise your rates should not discourage you from making your claim. You buy insurance for a reason. If you have the insurance, use the insurance. Don’t be afraid at all. If you have the right coverages, I would not tell you to avoid using your insurance coverage, because of this fear.

If your insurance company tries to raise your rates, go to a different insurance company. There’s a lot of choice out there. I would not hesitate for a second to bounce to a different insurance company if they raised my rates. If I didn’t cause an accident, and all the sudden they’re playing games to try and claw back some of the money that they’re paying out due to a claim, find another provider.

I’ve had enough of these stories come through our office, and we’ve talked to so many people about this issue. While the law is clear about what insurance companies can’t do, it is quite difficult to prove that an insurance company actually raised premiums directly because of a previous accident claim. They will never admit anywhere, in writing or over the phone, why your rates went up. They’ll offer you a billion reasons, but they’ll never make it about the claim you made.

It would be very coincidental that you all the sudden have a rate increase, because you filed a claim against your insurance. I don’t believe in coincidences.

Be Prepared to Switch

If you are planning to file a claim with your insurance company, you should be prepared to switch insurance carriers. Now might be a good time to reach out to an insurance broker, to start comparing insurance policies and rates.

Don’t forget that you have choices! Don’t wait for your policy to come up for renewal. You can change your coverage at any time.

If this article has spared any questions about your insurance or a claim that you’ve made, don’t hesitate to call our office at 602-531-3911.

full coverage car insurance is a myth

This article on full-coverage car insurance is the second of a three-part series on car insurance. The first article is State-Minimum Car Insurance Is Not Enough. The final article in this series is Should I Call My Insurance Company After an Accident?

There is no such thing as “full coverage car insurance.”

Full coverage car insurance is a vague and arbitrary term that really doesn’t mean anything. What seems like full coverage to one person may be minimal for others.

Ask your friends or family what kind of car insurance they have, and they’re likely to say one of two things. Either they’ll say, “I have minimum coverage” — which is what a state mandates you to carry, in terms of coverage — or “I have full coverage.” Usually, there’s no in-between.

When the term came into common usage years ago, it served as a generalized way to speak about having different coverages such as collision and comprehensive insurance in one’s auto insurance policy. Collision insurance covers property damages that you, as a driver, might incur upon another driver’s vehicle, if you were to cause an accident. Comprehensive insurance is property damage that occurs in situations that don’t involve a crash, such as wildfire or a tree falling on your car during a bad storm.

Put Down Your Full Coverage Car Insurance Calculator

When you really think about all possible accident outcomes, is there ever a situation in which you can be entirely covered in full?

Let’s just use the most obvious example — one that’s really quite hard to imagine. Suppose that you’re in a car accident and you kill the other driver. There is no way to purchase a policy that would be commensurate with the loss of a life. You can’t say, “I’m fully covered. If I kill someone, I have enough insurance to protect myself.”

How do you value a human life? It’s really hard to put a dollar amount on the other person’s life. From a legal restitution standpoint, it’s well into the seven figures — possibly eight figures and beyond. And if a car accident resulted in multiple fatalities? Commonly accepted ideas about full coverage assuredly do not take such scenarios into account.

So, if you’re conducting an online search for a full coverage car insurance calculator, stop right now. Put the topic to rest and move along. You can only have a level of insurance coverage that would be considered adequate or sufficient. Think instead about coverage that you think is sufficient for your financial position and how much coverage you would need in the event of a terrible accident.

Think About Achieving Adequate or Sufficient Coverage Instead

How do you decide how much car insurance to buy? Start the analysis by asking yourself, “How much coverage do I want to carry to adequately protect myself, to make sure that I’m not personally responsible for paying for injuries and damages out of my own pocket?” In other words, ask yourself how much insurance can you purchase so that you will never have to write a check out of your personal bank account, to pay for damages that may happen if you cause an accident.

Your analysis may start with questions such as, “Do I own home? Do I have a business? Do I have things that could be in jeopardy if I cause an accident, and I don’t have enough coverage to protect me, and then the person I harmed comes after me personally?”

Whether you have a lot of assets or feel as if you don’t have much to protect, you will still want to put yourself in a position where you are protecting others in the event that you cause an accident. That is truly a matter of civic duty and personal responsibility, regardless of your financial position. You can still purchase more car insurance than the state minimum.

Fact is, you can get good coverage that projects you in the event that a very bad accident were to happen. If your state-minimum insurance is $15,000 in per-person bodily injury liability coverage, try asking your insurance broker or insurance carrier to give you a price for 10 times that amount, or $150,000. Compare the price of that coverage with the state-minimum, and most likely you’ll find that they difference in price is not significant, especially when parceled out as a per-month cost.

UM, UIM and Umbrella Coverage

You can also look into uninsured motorist coverage (UM), underinsured motorist coverage (UIM), and an umbrella policy that would kick into effect if the underlying coverages are insufficient. UM is designed to protect you when another driver lacks insurance. UIM protects you when the other driver has an inadequate policy limit, such as the state minimum. One recommendation is to purchase UM and UIM in the same amount as your liability insurance. In other words, if you’re going to purchase a bodily-injury liability policy of $100,000 per person, per accident, purchase a UM and UIM policy in the same amount to protect yourself.

Umbrella coverage is an extra layer of liability coverage that kicks in when your underlying coverage limits are met. Remember, medical expenses can reach seven-figure amounts. In an event when the other driver does not have enough insurance, umbrella coverage ensures that you have additional protection. You can have anything from $1 million to $5 million in umbrella coverage.

Bottom line, you don’t want to experience a very bad crash and then wish you had the right amount of coverage after the fact.

My Idea of Adequate Car Insurance

In closing, I would like to share my car insurance coverage limits to show you that I put my money where my mouth is. I wouldn’t encourage you to do something that I don’t do myself!

  • $500,000 Liability Coverage (to protect others)
  • $100,000 Property Damage (to fix someone else’s vehicle)
  • $1,000,000 Umbrella Coverage (to protect others)
  • $500,00 UIM/UM Coverage (to protect myself and passengers)
  • $1,000,000 Umbrella Coverage on UIM/UM (to protect myself and my passengers)
  • $50/day rental reimbursement (for a rental while my vehicle is being repaired)
  • $5,000 Med Pay (for medical expenses related to a crash)
  • Comprehensive and Collision Coverage (to repair my vehicle)
  • $500 deductible

Regardless of how much coverage I have, I would never say that I have full coverage car insurance. Instead, I will tell you that I have what I consider to be sufficient coverage — or in alignment with my financial position.

Next time you shop for insurance, remember that there are many good people out there who can guide you on how policies work and what coverage they recommend for you. Insurance brokers, in particular, can be a great resource. I like using a broker, because rather than obtain quotes from multiple insurance companies separately, the insurance broker can collect quotes for you. By looking at coverage limits and prices from multiple insurance companies, you can confidently make an educated decision.

arizona state-minimum car insurance requirements raised july 1, 2020

On July 1, 2020, something rather momentous happened in the state of Arizona. For the first time in nearly five decades, Arizona state-minimum car insurance requirements were raised.

The new law is codified in the Arizona Revised Statutes under Section 28-4009. Auto insurance policies issued or renewed after July 1, 2020 must pay at least:

(i) $25,000 because of bodily injury to, or death of, one person in any one accident.
(ii) Subject to the limit for one person, $50,000 because of bodily injury to, or death of, two or more persons in any one accident.
(iii) $15,000 because of injury to, or destruction of property of, others in any one accident.

These three numbers — $25,000/$50,000/$15,000 — represent new limits that are paid out to another person if a motorist is at fault in an accident. You cannot purchase insurance for less than these limits.

The Arizona Legislature passed the state bill that put these new limits into effect — State Bill 1087 — in May 2019. The bill was signed into law by Arizona Governor Doug Ducey on Friday, June 7.

Previous Coverage Limits Had Become Outdated

When you receive your renewal notice for auto insurance — or if you are currently shopping for new insurance — the quotes you receive may look a little different. This is simply because Arizona state-minimum car insurance requirements have been raised.

The previous coverage amounts for motor vehicle accidents were $15,000 per person, per accident; $30,000 total accident; and $10,000 for property damage.

The problem with the old limits is that they were based on cost-of-living equations that were established in June 1972, when a McDonald’s Quarter-Pounder with cheese cost just 70 cents. These days, the same burger costs $3.79. Only the number of calories has remained the same!

Due to inflation, limits that seemed quite adequate nearly five decades ago had grown completely inadequate over time. Medical expenses and the cost of vehicles were much lower in 1972. Today, you can no longer step foot in an ER for less than a few thousand dollars.

Bill’s Passage Overcame Insurance Industry Resistance

The insurance industry was adamantly opposed to this move. Time and time again, this bill had been brought to the Arizona Legislature in one form or another by various organizations, including one that I belong to — the Arizona Association for Justice. Time and time again, it did not pass.

Why did insurance companies want to keep Arizona car insurance minimums so low? Frankly, under old amounts, they could pay out less, should someone be in an accident.

Because payout limits were so low, insurance coverage was not protecting people injured in automobile accidents. That’s why the Arizona Association for Justice and like-minded organizations fought so hard to increase these limits.

Accident Victims Have More Protections from Out-of-Pocket Costs

Assume that you’re in an auto accident. You go to the emergency room and get a normal workup. You may not have any broken bones, but you’re given some imaging, as a precaution. Later, you go through physical therapy, and start to feel better.

The cost of medical care just for these simple procedures and therapies could well exceed $15,000 — and possibly total $25,000.

  • Under the old limits, if someone only carried Arizona state-minimum car insurance, the most you could receive per accident was $15,000. If the person who caused the accident did not have any additional money to contribute to this claim, to help you pay off all your medical bills, you would be forced to pay the $10,000 out-of-pocket for an accident that was not your fault.
  • Under the new limits, insurance coverage would reimburse you for that $10,000 differential — up to the new $25,000 limit.

Keep in mind that this analysis does not account for pain and suffering or lost wages.

Of course, there are people who carry much more than the minimum limits. I encourage you to do the same, if your economic situation allows.

Vehicle Damage and Arizona State-Minimum Car Insurance

Today’s vehicles have more features than ever, which is reflected in higher sticker prices. Yet, this also means that vehicles’ values can suffer quite a bit more damage. Frame damage or deployed airbags can result in a total loss.

Unless you’re looking for an older model or a used vehicle, it’s very difficult to find a vehicle under $10,000 these days. Anything new costs far more than $10,000.

Now that property damage limits have been raised to $15,000 — from $10,000 — it’s more likely that Arizona state-minimum car insurance will more fully cover damage to newer vehicles.

Higher limits make it more possible to recover what’s called a “loss of use claim.” These are the expenses related to renting a vehicle while your vehicle is either being repaired or declared a total loss, as well as time needed to find a new vehicle.

Higher limits also allow more accident victims to be compensated for their diminished value claims. A vehicle loses value because of the simple fact that it was damaged in an accident. Even though it’s repaired, it’s still worth less.

Arizona law states that you do not have to wait until you sell your car to collect for that difference in value.

To illustrate how diminished value works, imagine the following scenario:

  • Let’s say that your vehicle was worth $20,000 before an accident.
  • After an accident, it receives $8,000 of repairs. The insurance company chooses to repair it and not declare it a total loss.
  • However, your vehicle is now worth less, because it was in an accident.
  • You order an appraisal from an auto expert, who tells you that your vehicle lost $6,000 of value due to the accident. Therefore, not only should the vehicle receive $8,000 in repairs, but you should also be compensated for $6,000 in diminished value.

In sum, the old $10,000 limit did not provide enough coverage to repair vehicles, compensate owners for their loss of use, or account for diminished value.

Kudos to the Arizona Association for Justice

Higher Arizona car insurance minimums reflect values the Arizona Association for Justice emphasizes: to serve the community, to protect the rights of the public, and to make sure that injured victims are protected in the event that they get hurt due to someone’s negligence.

With that said, a big thank you goes to Jeff Trachtenberg of the Arizona Association for Justice. Jeff is a stalwart in our community and absolutely pushed hard to increase the limits in Arizona, so that they caught up with other states’ limits. He created a better environment for those who are injured in accidents, and those that need to take advantage of these new insurance limits.

If you have more questions about new Arizona state-minimum car insurance, or if you’re just curious about what kind of coverage you should have, give Negretti & Associates a call. We can help make sure you’re protected. Contact us online, call us at 602-531-3911, or text us with questions.

tesla smart summon liability and insurance implications

In late September, car maker Tesla revealed a truly remarkable new technology for its cars, called Smart Summon. This software application enables Tesla drivers to use their smartphones — almost like joysticks — to order their cars to come to them.

With Smart Summon, you can walk out of a grocery store, pull out your smartphone, and request that your Tesla drive itself from its parking space to the curb where you’re standing, to pick you up.

Search the web for “smart summon” and you’ll already find hundreds of articles and videos about this new technology. The new self-driving feature has been met with immense curiosity and enthusiasm, as well as concern.

One of those articles has been written by Timothy Lee for arstechnica.com. After watching more than one hundred Smart Summon videos, Lee offers his impressions of the technology. “Smart Summon certainly has weaknesses (and I’ll discuss those in detail),” he writes, “but it’s important to first acknowledge that the technology worked in the vast majority of the more than 100 videos I viewed. I watched dozens of people successfully summon their cars from across parking lots without incident.”

It’s amazing to see Lee’s curated collection of perfect drives and near misses that have resulted from use of this new application.

Yet, while worthy of excitement, the new Smart Summon feature does raise many “what if” questions surrounding liability and insurance coverage.

What if a Tesla were to hit another vehicle, or is hit by another vehicle, while it is in the process of being summoned — and there’s no one physically driving the vehicle? Who is responsible?

Even worse, what if a Tesla were to hit a pedestrian while in Smart Summon mode? Is the “driver” — or summoner of the vehicle — at fault, or is the car’s manufacturer?

Watch a Tesla in Smart Summon mode try to navigate out of a parking space with a pedestrian nearby.

Insurance Policies Have Been Left in the Dust

Just like a fully loaded Tesla Model S zooming ahead of a diesel semi-truck after a light turns green, self-driving vehicle technology has raced ahead of state and federal laws. Insurance companies, too, have plenty of catching up to do.

Customarily, insurance companies cover the liability caused by the driver while utilizing a vehicle, as well as damages caused when another driver either doesn’t have insurance or doesn’t have enough coverage.

Prior to the availability of Smart Summon technology, it would have been highly unlikely for insurance companies to seriously contemplate whether they needed to provide coverage for vehicles that were suddenly able to drive themselves.

In other words, a scenario in which a summoned Tesla gets into an accident while the insured “driver” navigates her Model S with her phone through a busy Home Depot parking lot, to pick her up at the curb, would have seemed pretty far-fetched just a few weeks ago.

To continue with that example, imagine that a human-operated vehicle crashed into the smart-summoned Tesla in a parking lot. The Tesla owner wouldn’t have an injury claim, but she certainly would have a property damage claim. Does the insurance policy afford coverage in that situation?

Arguably, at this point in time, the insurance company would have to provide coverage. Even though the car may be “driverless,” the assumption is that the insured would be the owner/operator of that vehicle — commanding her vehicle through her phone.

But this is only an assumption. Such scenarios haven’t been fleshed out in the court of law yet. Smart Summon is too new.

Until such cases develop, cause for concern will remain. Use of Smart Summon will continue to raise important questions about who is ultimately responsible for an accident.

Just as we will learn of updates that Tesla has made to Smart Summon, we will assuredly witness a constant evolution of other applications that are coming to market. Insurance coverages afforded to these vehicles will change, as well.

Parallels with Rideshare Insurance

It wasn’t that long ago when Uber and Lyft first made it possible for people to use their own cars for hire.

During the early days of Uber and Lyft, there were never exclusions in automobile policies. If you were driving your vehicle for hire, not being covered by your personal auto insurance policy was unthinkable. The need for a secondary or supplemental insurance policy, or coverage options from a rideshare company, was the last thing on an Uber or Lyft driver’s mind.

Today, a huge number of people drive for Uber and Lyft — many on a part-time basis. Yet, nearly every individual insurance policy excludes coverage for driving for a rideshare company, should he or she get into an accident while using a personal vehicle for a commercial purpose.

In the ridesharing industry, insurance policies eventually caught up with technology. We’ll probably see the same thing happen with Tesla’s Smart Summon application.

A Developing Story

When a revolutionary technology emerges, the story surrounding the technology will take time to develop. At the time of writing this article, Smart Summon is in its third week of use. Numerous companies are working on technologies that are similar to Tesla’s. It’s almost impossible to predict what will happen next.

Undoubtedly, insurance policies will evolve. We will witness challenges to insurance coverage. We are going to learn where responsibility lies with self-driving cars. We’ll find out whether insurance companies will assume responsibility and provide coverage, should a driverless accident or injury occur.

In the meantime, be sure to watch these newest Smart Summon videos. They are fantastic and captivating. The ability to order a vehicle to pull out of a parking space, drive in a crowded parking lot, navigate its way around cars and pedestrians, and pick us up in the front of a store, is mind-bending.

uninsured and underinsured motorist coverage

What is the difference between uninsured motorist coverage and underinsured motorist coverage?

  • Uninsured motorist coverage (“UM”) is designed to protect drivers and passengers if the at-fault driver in an accident does not carry automobile liability insurance coverage.
  • Underinsured motorist coverage (“UIM”) is designed to protect drivers and passengers if the at-fault driver has insufficient automobile liability insurance coverage to pay for your injuries.

For example, if you are in a vehicle accident and sustain $50,000 in damages due to injuries, but the at-fault driver only has the minimum $15,000 bodily injury coverage, UIM may help bridge the financial gap.

Twenty-one states and the District of Columbia require UM. Just fourteen states require UIM. In Arizona, Colorado and California, however, UM and UIM are not mandatory. Nevertheless, each state has its requirements with regard to UM and UIM.

Arizona law states that every insurer writing a motor vehicle liability policy must offer, in writing, UM and UIM to their insureds in an amount equal to the insured’s liability coverage. If the insureds reject this coverage, insurers must prove compliance with the statute by having their insureds sign a Department of Insurance-approved form that indicates selection or rejection of such coverage.

Colorado law states it is mandatory that the insurance provider offer collision, medical-payments, and uninsured-motorist coverage. Such coverage may only be rejected by the insured in writing.

California law requires insurers to include UM and UIM in automobile policies, unless the insurer and insured execute a written waiver in a specific format that is laid out in California law. If the insured does not sign the three-page waiver, UM and UIM are made part of the insurance policy.

Automobile accidents occur every day. In fact, more than 75,000 people are injured each day due to vehicle accidents in the US. So, whether you are heading out for a hike, going to relax by the ocean, or taking your family to a Spring Training baseball game, make sure that you understand and have implemented your state’s automobile insurance requirements.

It is estimated that in the United States alone, over 2.35 million people are injured and approximately 37,000 people are killed in vehicle crashes each year. With popular and growing states such as Arizona, Colorado and California seeing above average crash statistics, it becomes even more imperative for drivers to understand their state’s automobile insurance laws.

Minimum Insurance Requirements

Arizona, Colorado and California all function under a traditional “tort” or “fault” automobile insurance model. This means that drivers who are involved in a vehicle accident in which they sustained injuries, or property damage, may: file a claim with their own automobile insurance company, file a claim with the at-fault driver’s automobile insurance company, or file a personal injury lawsuit in court seeking damages from the at-fault driver.

Although automobile drivers from each state must legally carry automobile insurance on their vehicles at all times, it becomes even more important if they have been involved in an accident. Automobile insurance is extremely important because it protects a person from extreme financial loss due to an accident.

Arizona

Under Arizona law, drivers must carry liability insurance with at least the following amounts of coverage:

• $15,000 per person for bodily injury or death
• $30,000 per accident for two or more persons’ injuries or death, and
• $10,000 for property damage

Colorado

For motor vehicles, Colorado law requires the following minimum amount of liability insurance:

• $25,000 per person for bodily injury
• $50,000 per accident for two or more persons’ injuries or death, and
• $15,000 per accident for property damage

California

Under California law, the minimum liability insurance requirements for private passenger vehicles are:

• $15,000 per person for bodily injury or death
• $30,000 per accident for two or more persons’ injuries or death, and
• $5,000 for property damage

Using California as an example, the three amounts are known as split limits, and are generally broken down in the following fashion: 15/30/5. These numbers indicate the maximum amount that your carrier will pay out for each category. The first amount for bodily injury or death liability covers costs if you are involved in an accident in which you are considered at fault and must pay an individual victim’s medical bills, lost wages and pain and suffering damages. The second amount for bodily injury or death liability is to cover the costs for all people involved in the accident, and the third amount is for the damage that you have caused to someone’s property.