Tuesday, March 10, 2009

Legal Ease: Hazards ahead — buying automobile insurance

Editor’s note: Legal information listed here is intended to be general preventative measures and legal first aid to help readers avoid problems in legal situations before engaging legal counsel. These are not a substitute for hiring an attorney and should not be considered to be legal advice specific to any situation.

Nearly every adult in Alaska needs to drive and thus needs automobile insurance. Public transportation is minimal and distances are often too great to walk or bicycle, even if the weather is dry and 50 degrees above zero, rather than 50 below.

Every driver is legally required to have automobile insurance whenever they are driving. If you don’t have insurance and get a ticket or are in an accident, you will probably lose your driver’s license for some time and could be legally prosecuted.

However, all automobile insurance is not the same. Your insurance should protect not only others, but you and your passengers. Buying automobile insurance can be very confusing and it’s been my experience that people are often surprised, after being injured in an accident, to find that their insurance coverage is not always what they assumed. Here are some suggestions when buying or renewing your auto insurance.
  • Check with your insurance agent to be sure that all of your vehicles are properly insured. In Alaska, each individual vehicle is usually insured separately for all permissive drivers, rather than a driver being insured for any and all vehicles.
  • Deal only with reputable insurance companies that have a long track record insuring drivers in Alaska and that have a good reputation for reasonable and fair dealing both with their own insureds and third parties. If you cause an accident that results in damage or injury to someone else, you don’t want to be insured by a company that forces every case to court. Life is too short.
  • It’s usually best to buy your insurance from a company with a local agent with whom you can review your needs and your insurance policy and who can help you immediately in the event of an accident.
  • Do not drive an uninsured vehicle even if you have insured your other vehicles.
  • The bare minimum third-party liability insurance required by law only provides coverage for anyone that you might injure as a result of an accident that is your own fault. If you cause an accident that results in injuries to your own passengers, pedestrians or third parties in other vehicles, then those persons would ordinarily be covered by your third-party liability insurance, but you would not be covered.
  • The minimum third-party liability insurance required by law does not provide any payments or protection for you in the event that you are injured in an accident. In order to adequately protect yourself, you would need to purchase optional supplemental medical payments and uninsured/underinsured motorist insurance coverage. Check with your insurance agent.
  • The minimum third-party liability insurance required by law does not provide any payment for damage to your own vehicle. In order to cover your own vehicle against damage, you must purchase some form of collision coverage.
  • Read any insurance policy language carefully. Be sure that you understand what is covered and what is not covered. If you are not sure, ask your agent or company and confirm your understanding in writing.
  • Most insurance policies include a standard sheet showing the coverages and amounts of coverage that you have purchased, which is usually called a declaration page, and also a standard handout that describes the policy provisions. Read the definitions — they are often the source of many misunderstandings and are usually binding.
  • Insurance policies are contracts and are generally interpreted as contracts by the courts, although the courts usually require insurance policies to be written clearly, more so than ordinary contracts.
  • By statute, the current minimum legal amount of third-party liability insurance in Alaska is $50,000 per person and $100,000 total per accident. However, this legally required minimum amount was enacted many years ago and is usually inadequate today due to rising medical costs.
  • Just because you have purchased the legally required minimum amount of insurance does not mean that you are adequately insured against personal financial liability if you cause an accident that injures other people. You probably are underinsured in today’s world. Again, check with your insurance agent.
  • Increasing the amount of your liability insurance coverage beyond the bare legal minimum is often reasonably priced and provides more protection for you and others you may injure. If you cause serious injuries because of an accident that is your fault, buying only the legal minimum amount of insurance may put you and your assets at financial risk for any portion of a court judgment that exceeds the amount of your insurance coverage.
  • Check your auto insurance policy to see whether you have purchased separate medical payments coverage, which pays medical bills for you and your passengers, even if you are at fault. This separate coverage is not very expensive and is really worth the extra premium.
  • Check your auto insurance policy to see whether you have purchased separate Uninsured-Underinsured Motorist (UIM) coverage. UIM coverage protects you if the other party is at fault for a serious accident and is not insured or does not have enough insurance to cover the full amount of your claim. This separate coverage is not very expensive and is really worth the extra premium.
  • Be sure that your automobile third-party liability insurance is always in force and current. This is required by state law and you can be prosecuted if you do not have the mandatory minimum insurance in force in the event of a traffic stop or accident.
  • In addition to receiving a citation, if you are driving without current insurance, you will probably lose your driver’s license for several months even if the other party is completely at fault for an accident. You will also likely be required to purchase very expensive, high-risk SR-22 insurance. A second offense is punished more severely and leads to a longer time when your driving license is suspended. If you knowingly drive with a suspended license, you will likely be jailed.
  • If you do not have third-party liability insurance in at least the statutory minimum amount, then Alaska Statutes prevent you from recovering any losses from an automobile accident except medical expenses and lost income, even if the other party is completely at fault for the accident.

Joseph Kashi received his law degree from Georgetown Law School and has practiced law on the Kenai Peninsula for the past 32 years. He is admitted to legal practice before the U.S. Supreme Court, the Alaska Supreme Court and all lower state and federal trial courts for Alaska. His Web site, www.kashilaw.com, contains more information, including legal tips and links to legal, government and community resources.

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