Let me start this off with a disclaimer: I am not an attorney and the information in this article is for educational purposes only for the general public and not intended to be used as individual recommendations or advice. All though I am a Certified Insurance Counselor, everyone’s situation is different and should be handled on a case by case basis.
You have heard the saying before, “Buyer Beware.” How many of us take it seriously? We should right. Especially when it comes to our auto insurance. Many of us see auto insurance as a commodity, something that is the same no matter where or who you purchase it from. This is a myth and you need to continue reading to find out one major cause of concern that may be looming with your auto insurance policy, it could save your financial future.
Everyone knows that the state requires them to carry auto insurance so they purchase it without giving it a second thought. This is a mistake you don’t want to have to learn the hard way so I’m going to give you a little free advice, all you have to do is keep reading.
The liability portion of your auto policy will cover you for bodily injury or property damage you cause to another party up to your policy limits. What you may not know is that your carrier may limit those damages to compensatory damages and may exclude punitive damages. To understand how this might really affect you, you need to know what the difference between the two is. This could cost you tens or even hundreds of thousands of dollars in the event of a claim.
Compensatory: A plaintiff who wins a tort suit usually recovers the actual damages or compensatory damages that he or she suffered because of the act of another party. Depending on the case, these damages may be for direct and immediate harms, such as physical injuries, medical expenses, and lost pay, or harms as intangible as emotional distress.
Punitive: Punitive Damages are damages awarded in addition to compensatory damages and are designed to punish the defendant to deter him or her from committing similar behavior in the future.
If you fully understand the difference between these two types of damages, you can see how you might be left holding the bag if your insurance carrier excludes coverage in your auto liability policy for punitive damages.
Now, you might ask me to cite an example of how this might come into play. I’m going to make one up. Let’s say you took some pain medication or sinus medication early one morning before you left the house. The bottle clearly states you should not drive or operate machinery for a certain number of hours after taking said medication, however, we have all probably done this before in our lives, so you think nothing of it and head out the door to work or wherever you are going. You doze at the wheel for just a split second and veer into traffic causing a horrible accident that injures several other parties. You are found liable for the damages. Your insurance will pick up the tab up to the policy limits for the damages you caused, however, let’s say a judge/jury wants to punish you further because you should not have been driving after taking the medication so they awarded an additional $100,000 to be paid. Depending on what carrier you have, these types of judgment, punitive damages, may be excluded and you may be left holding the bag.
You may say, well if that happened, I would file bankruptcy. Why would you want to ruin your life by filing bankruptcy when you can get the coverage you need for probably less than what you are paying now. You just need to be with the right company.
Call Insurance Professionals of Arizona for a free policy review and quote. 480-981-6338