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Oct. 6, 2006
More is always a better idea
Buying extra auto insurance means you won't be out of pocket.
JOHN HAMILTON
A person seriously injured in a motor vehicle accident is not always
fully insured against lost future income and medical care costs,
even when another motorist is found to be 100 per cent at fault
for the accident.
Surprised? If you are, you're probably not alone. After all, motor
vehicle insurance is mandatory in British Columbia, isn't it?
Yes, but not all motorists using our roads are from British Columbia,
and not all British Columbians properly insure their vehicles.
Sometimes a motorist who causes an accident doesn't have enough
insurance to pay for all of the damage and injuries caused, or may
not have insurance at all. If you are injured in such an accident,
a part of your own insurance policy called underinsured motorist
protection (UMP) contributes towards payment of the damages that
you are legally entitled to, but which the at-fault motorist is
unable to pay. However, you are not guaranteed full compensation.
If, for example, the at-fault motorist only carries $200,000 third-party
legal liability coverage, but damages for injuries suffered by you
and your passengers exceed that amount, UMP will cover the excess
amount to a maximum of $1 million per person.
Isn't $1 million enough? No. If you have difficulty conceiving of
an injury that would result in more than $1 million in damages to
you or a loved one, you may want to think again.
The truth is that, in the context of a lifetime of earnings, $1
million is no longer enough money. A 30-year-old earning $33,000
per annum will earn this by age 60. A severe injury can permanently
disable someone and stop them from working.
With excess underinsured motorist protection, you can increase your
coverage to $2 million for only $25 a year. This $2 million in coverage
also applies to other household members if an underinsured motorist
injures them while they are walking or riding a bike.
Consider the following situation. You or a member of your household
is involved in an accident causing severe injuries. The court awards
a settlement of $2 million to cover the cost of lost wages and a
lifetime of medical care. Unfortunately, the at-fault motorist carried
liability insurance of only $1 million.
Without excess UMP, your claim would be paid up to $1 million. That
means there's a $1 million shortfall between your ICBC settlement
and your court award for damages. Where will you find the money
for your ongoing medical expenses and care costs? With excess UMP,
this shortfall could be covered up to a maximum total limit of $2
million.
Don't rely on others to carry adequate insurance. Protect yourself
with extra coverage by carrying excess UMP. For $25 a year, it is
well worth it. You don't have to wait until you renew your insurance.
You can purchase it any time.
John Hamilton is a lawyer at Cobbett & Cotton in Burnaby,
with nine years of experience assisting accident victims.
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