Most people, at one point or another in their lives, will have the unfortunate experience of having a motor vehicle accident. Personal injury attorneys know that clients are often woefully misinformed about the law and the rights available to them when it comes to motor vehicle accidents.
The following scenario is one that occurs frequently, and leads to frustration for both attorneys and the clients. A person has a car accident and suffers injuries, both physical and/or psychological; the person feels that given those injuries, s/he should be compensated; the person then decides to seek out legal representation in order to recover money damages for the injuries sustained and makes an appointment with a personal injury attorney to discuss the case and the legal remedies available to him or her. However, the person often does not realize that, by virtue of the automobile insurance policy he or she has purchased, that person has him or herself predetermined whether s/he is entitled to damages, and in what amount. Yes, the terms and conditions of your automobile insurance policy, which you most likely purchased without consulting an attorney, is going to dictate your legal rights and remedies after a automobile accident!
Thus, it is crucial to review your automobile insurance policy and know exactly what is in it. This is especially true given the current state of the economy; it should come as no surprise that countless individuals are looking for ways to save money. During these difficult financial times, the commercials promising to save you “hundreds of dollars per month on your car insurance” seem all the more enticing. While cutting the cost of your automobile insurance policy may save you money in the short term, what most people do not realize are the significant consequences that come along with those ‘savings’.
Virtually everyone is looking for ways to save money, not just individuals, and the insurance industry is no exception. Insurance companies are able to cut their own expenses by minimizing their exposure to liability, which means limiting the possibility that they will have to pay out money to you, the insured. Insurance companies utilize a number of mechanisms in an effort to minimize not only under what circumstances they would be responsible for providing coverage, but also in what amount. Towards this end, insurance companies employ two specific methods of limiting their exposure to liability, which in turn reduces the cost of insurance for you.
The first is offering what is called the ‘limitation on lawsuit’ option to the insured. The insured selecting this option often results in a significantly lower policy premium because this option greatly minimizes an insurance company’s exposure to liability. It precludes the insured from suing for pain and suffering (unless the injury is ‘permanent’). A person with the ‘limitation on lawsuit’ option is often disappointed when consulting a personal injury attorney after an automobile accident upon finding out that he or she may not be able to recover all the damages to which s/he feels entitled.
The second way insurance companies reduce their costs is through what are called ‘step-down clauses’. These clauses reduce an insurance company’s exposure to liability by ‘stepping-down’ the amount of coverage for which they are responsible to a lower amount depending on the availability of ‘other available insurance’. In light of the economy, such clauses are implicated more and more, not only because people are increasingly choosing lower policy limits, but also because more people are living under the same roof in an effort to cut their own costs; more people living together increases the likelihood that there is ‘other available insurance’, which in turn increases the likelihood that these step-down clauses will come into play, thereby closing yet another avenue of recovery for an insured.
In conclusion, people must be aware that although they may be able to save money on their insurance policies by cutting corners, they should be careful and know that they are also giving up certain rights after an accident, and foregoing important privileges in exchange for that reduced cost; this is how insurance companies ‘save you money’. Despite cute little reptiles and actors with smooth and assuring voices, insurance companies are not offering lower policy premiums out of the goodness of their hearts. In fact, limiting insurance companies’ exposure to liability, and thereby lowering premiums payments, quite literally comes at a price.