Have you ever found yourself in a situation where you’ve fallen victim to a personal injury or employment issue, and your insurance company won’t cover the total amount? This terrifying scenario is often a result of underinsurance – a term that many of us don’t fully understand until it’s too late.
In this guide, we’ll explore the concept of underinsurance, explain how you can recognize if you’re not fully covered, and provide strategies to protect yourself from this financial pitfall. Keep reading to arm yourself with vital knowledge that could save you from falling into the underinsurance trap.
The Basics: What is Underinsurance?
. This could be because you purchased a policy with limited coverage or because you did not purchase enough coverage to cover your needs.
Sometimes, people mistakenly believe that the minimum coverage required by their state will be enough to cover them in the event of an accident or injury. However, this is often not the case – especially when it comes to personal injury and employment cases, as unexpected costs can quickly add up.
Depending on the policy and claim, you might need to cover medical costs, legal expenses, repairs, and other damages yourself. This is in addition to any deductibles you have to pay. It’s important to note that while a good insurance policy can’t prevent life’s unexpected events, it can definitely help ease the financial burden that comes with them.
If Person A is injured in an auto accident caused by Person B, and Person B’s insurance policy limit is $100,000 while Person A’s claim is worth $250,000, underinsurance coverage comes into play. Person A can check their own insurance company for their underinsurance coverage. Person A may receive more than $100,000 from Person B’s policy if it has sufficient coverage.
For instance, with $250,000 underinsurance coverage, Person A could receive up to an additional $150,000. However, if Person A only has $100,000 in underinsurance coverage, they won’t receive more than the $100,000 from Person B’s insurance. Adequate underinsurance coverage can provide extra compensation if the other party lacks sufficient coverage.
Common Reasons for Underinsurance
Underinsurance coverage is increasingly common, as many insurance companies are trying to lower their premiums to be more competitive in the market. There are a few main reasons why insurance companies might not cover the full amount of losses in an accident or injury. Some even reject claims entirely due to policy coverage limits or exclusions.
The most common reasons for underinsurance are:
- Insufficient Coverage: When purchasing a policy, make sure to read the fine print and talk to your insurance company. Ensure you have enough coverage for your needs, and be aware of any exclusions or terms that could leave you unpaid bills.
- Misrepresentation of Facts: If there are errors or omissions in the information you provided to the insurer, they may be able to deny your claim or adjust it accordingly. It’s important to double-check all documents and information before submitting them.
- Unforeseen Circumstances: In some cases, you might encounter an unexpected issue that is not covered by the policy. This could include things like natural disasters or sudden changes in circumstances that make it difficult to determine the cause of the accident or injury.
- Lack of Qualifying Evidence: When filing a claim, make sure you have enough evidence to prove your losses. Without sufficient proof, the insurer may question or deny your claim.
- Not Eligible for Full Benefits: In certain situations, you might discover that you’re underinsured because it’s challenging to qualify for higher coverage levels based on your present risk. For example, if you’re a high-risk driver, your insurer may not offer the same coverage amounts as someone considered low-risk.
It’s crucial to acknowledge that certain professions are more susceptible than others. For instance, individuals working in occupations that involve a higher likelihood of personal injury or employment discrimination face increased vulnerability. These include healthcare workers, first responders, and individuals in the hospitality industry.
Recognizing Underinsurance: Signs You’re Not Fully Covered
It’s often hard to recognize underinsurance without a detailed look at your policy. However, there are a few key signs you can keep an eye out for that can help you determine whether or not you’re at risk.
Here are a few:
- Your employer solely provides your life insurance coverage. This type of coverage is often limited and can leave you underinsured.
- Your family is growing, and you haven’t taken into account the impact of additional dependents on your coverage.
- Your income or assets have significantly changed since you purchased the policy.
- You haven’t checked your policy in years, and the terms might have changed a lot since then.
- You selected an amount without considering your requirements. This means you may have underestimated the amount of coverage you need.
- Your debt is still not fully paid, or you are facing financial difficulties.
Strategies to Protect Yourself from Underinsurance
Now that you know what underinsurance coverage is and the common signs of it, let’s discuss some strategies to protect yourself from this pitfall. Below are some simple steps you can take to make sure you’re fully covered.
Review Your Coverage Regularly
Risks of underinsurance can significantly increase if you don’t review your policy regularly. Read through the terms of your policy every few years to ensure you’re still covered for the risks that matter most. If your circumstances have changed, you may need to increase your coverage or make other adjustments.
Choosing a policy with lower benefits might seem attractive at first, as it means paying lower monthly insurance premiums. However, it could leave you with costly out-of-pocket expenses in the event of an accident or injury.
Research Your Options
If you’re not happy with the coverage offered by your current policy, take some time to shop around and compare different options. Many insurance companies offer different levels of coverage and can customize policies to fit your needs. Before signing up, ensure you clearly understand what is included and excluded in the policy.
If you want to stay with your current insurer, try requesting a quote for a policy with a higher deductible. a great way to strike a balance between saving costs and ensuring you have comprehensive coverage.
Consider a Professional Consultation
In some cases, seeking professional advice when buying an insurance policy may be beneficial. A lawyer from Fogelman Law Firm can help guide you through the process and ensure that your interests are being looked after. They can help you understand the policy and its implications and make sure your best interests are represented.
How Fogelman Law Firm Can Help You Navigate Underinsurance Issues
At Fogelman Law Firm, our team of experienced lawyers has the knowledge and expertise to assist individuals and businesses with underinsurance issues. We understand that policyholders are sometimes left unprotected from financial losses due to incorrect or inadequate coverage.
We can help you negotiate with insurance companies, review the terms of your policy, and ensure that all necessary documents are filed properly. In addition, we provide legal advice and guidance on how to prepare for any potential underinsurance issues.
We Are Here To Help You Understand Your Insurance and Protect Your Rights
Underinsurance can lead to considerable financial hardship, leaving you unprotected when you need coverage the most. It’s crucial to review your insurance policies regularly, consider your changing needs, and protect your interests by seeking professional advice.
At Fogelman Law Firm, we are here to help. We are experienced in personal injury and employment matters, including dealing with underinsurance issues. Don’t take chances with your future – contact us today to schedule a free consultation. We are here to answer any questions you may have and help you get the coverage you deserve.
Let us help you understand your coverage and protect your rights. Remember, prevention is the key to staying protected in the event of an accident or injury.