Insurance Types

One thing that people don't know is what kind of insurance coverage they actually have. Before you're in a wreck, after you're in a wreck, if a loved one's in a wreck, you should always know what insurance coverage you have on your car. There are really three different types that you need to know about.
The first type is liability or fault-based insurance, and that is if you cause harm to somebody else or you hit somebody else or you're at fault, how much coverage do you have? By law, you have to have $25,000 worth of coverage, but a lot of us think we probably ought to have more because we hurt somebody or cause damage more than $25,000 the rest is on us. So talk with your insurance agent about, do I have enough liability or fault-based coverage. That part's pretty simple and most people know that.
The second thing though and people may not know about is something called no-fault insurance or medical payments coverage. In Kansas, it's called personal injury protection. And basically what it is is you can buy insurance on your own policy that will help pay for your medical bills and any medical bills of the passengers in your car, even if the wreck was your fault or nobody's fault or the other guy's fault.
And for me, for example, I have $3,000 worth of medical payments coverage. It costs me a very, very low amount of money every year and thankfully I haven't had to use it. But if I were in a wreck, even if I back into a tree, I could go get checked out and the first $3,000 in medical bills will be covered by my auto insurance coverage. If my daughter were in the car with me, her first $3,000 of medical bills would also be covered by my medical payments coverage. It's a no-fault provision.
I don't care if you have that or not, but I want you to make a decision that, it would cost me this amount of money for this amount of coverage and I've decided it's not worth it to me or I've decided that it is worth it to me. Instead, what I see day in, day out are people who are in a wreck, they don't even know that's available. They didn't know they could have had that.
For me, it's important to have it because I have a high deductible on my health insurance, so even though I could go to the doctor and get checked out through my own health insurance, the first couple thousand dollars are on me. So now I know that if I'm in a car wreck, I can use my medical payments coverage to take care of my deductible before I got into my health insurance. So ask about that. Know whether or not you want it and make a conscious decision.
The third kind of insurance that most people don't think about until it's too late is underinsured motorist coverage. In Missouri, for example, every motorist on the roadway is supposed to have $25,000 worth of insurance coverage. So if somebody else hits you and hurts you, you can expect that if they have insurance, they're going to have at least $25,000 worth of insurance coverage. Unfortunately, they may hurt you worse than their insurance limit. In which case, what do you do? Well, you can buy insurance on your own policy called underinsured motorist coverage that would pay after the other person's companies paid their policy limits up to the level of your damages.
Again, for me, I have made the decision to have $300,000 worth of underinsured motorist coverage. And so if I got hit by somebody who has $25,000 worth of insurance, I'm hurt $100,000 worth, my insurance would pay that extra $75,000. Instead, if that person who hit me doesn't have any assets as an independently wealthy ... doesn't have any other insurance, I would just be out of luck.
And so again, underinsured motorist coverage is something that you want to talk to your agent about. I don't care if anybody buys it or what amount, but I want them to know it exists so they can make a choice whether or not they want to protect themselves in case they get hurt by somebody who underinsured.

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