THE EDUCATION OBLIGATION ON BUYING AUTO INSURANCE
By: Barry L. Edzant, Esq.
Within the last couple of months, I've had an eye opening experience working with two new clients. Both of these clients were victims of serious automobile accidents, and suffered significant damages.
The first case involved a gentleman who suffered over $22,000.00 to his 2011 Mercedes Benz. I examined his auto insurance policy and learned that he had NO collision coverage. The negligent driver only had $10,000.00 for property damage liability. As such, my client was out $12,000.00. Upon questioning my client, I learned he was worth approximately $18 million dollars.
In the second case, my client had no uninsured motorist coverage. Naturally, the negligent driver was uninsured, and my client was left holding thousands of dollars in medical expenses. As it turns out, between my client and her husband, they earn more than $250,000.00 per year.
In both of these cases, I inquired with my clients why they had such bare bones insurance and in both instances, they responded that this is what their agents recommended them to buy. At this point I realized we have a significant problem in our society with consumers not knowing how to buy auto insurance, and agents not knowing how to sell it.
We protect our assets by buying large limits of liability insurance, and equally important, we buy large limits of uninsured motorist coverage to protect our family from drivers who carry no or limited liability insurance. We never rely on the negligent driver having enough insurance to take care of our needs. We protect our property, our health, and our livelihoods because we know the fallout from a major accident can be financially and physically catastrophic.
I once asked an auto insurance broker friend how much liability and uninsured motorist coverage he carried on his own policy. He responded he had a 100/300 liability policy, and 15/30 UM. When asked why only 15/30, he responded that it only covers your medical bills. He knew nothing about loss of earnings, or general damages also being a part of uninsured motorist coverage.
Insurance agents should take a more assertive role in learning about the product they sell, and must be more than just salespersons. Agents have a fiduciary duty to properly assess their customers' needs, and to at least call their customer each year and conduct an interview to make sure they have the insurance they need. The different types of insurance, as well as the different limits, should be fully explained, and clear examples should be provided the customer of what can happen in different accident scenarios.
We as lawyers also need to educate our clients how to properly buy auto insurance. It is as simple as sending an e-mail blast or a letter to our past and present clients. I cannot begin to count how often I've received calls from clients telling me how dangerously exposed they were. This simple gesture creates an enormous amount of good will and also serves to keep our names in front of our clients.
Three years ago I represented a gentleman who was involved in an accident suffering a severely damaged knee with subsequent infection. His medical bills exceed $100,000.00. The negligent driver carried a 50/100 liability policy which was paid quickly. Just two weeks prior to this accident, my client had spoken to his business attorney who reviewed my client's auto policy. He advised my client to raise his uninsured motorist coverage to $500,000.00, which he did after he left the office. His premium was increased by $20.00. Within one year following the accident, my client's insurance company paid him his UM limits of an additional $450,000.00.
This simple review of an auto policy by a concerned business attorney allowed my client to pay for all of his medical expenses, lost wages, and properly compensate him for his pain and suffering. All for a $20.00 per year increase.
There is nothing worse than telling your client, "Sorry, there is nothing I can do for you." While this statement to your client is not always preventable, educating the public on how to properly purchase auto insurance can go a long way to improve the quality of our clients' lives.
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