An insurance policy is a contract between you (the insured) and the insurance company (the insurer). An insurance policy breaks down into four essential parts: 1) The declarations (who is being insured, what is being insured, the policy limits and the term of coverage); 2) the insuring agreement (what the obligations of the parties are to the contract e.g. cooperation with the insurer in claims investigation, prompt reporting of claims, etc); 3) Conditions of the contract (what each party must do in order to comply with the insurance contract, for example, the insurer will not resolve a claim against its insured until it is reported and triggers the obligation to defend, investigate and indemnify); 4) Exclusions specify what the insurance carrier will not cover.  Please Call LA Jewish Lawyer at your los angeles lawyer referral service  using our toll-free number (855) 977-1212 for a FREE CONSULTATION.

Typical examples of “exclusions” include claims for off road vehicles (not able to be licensed for coverage under an automobile policy), claims for punitive damages and intentional acts. Punitive damage claims are designed to punish the wrongdoer and deter such conduct. The State of California has concluded that it is against public policy to have insurance against punitive damages. Another typical exclusion is for intentional acts. The primary purpose of insurance is to provide coverage for clams of negligence. Injury or damage was caused by a failure to do something or doing something improperly. This is quite different from an intentional act where the consequences are intended (e.g. running someone down in your car, or intending to punch someone in the nose).

“Full coverage?” Full of what?  

An insurance policy is like a suit of clothes. In order to obtain the right coverage, you must reach into the right pocket. For automobile liability, the State of California has mandated the sum of $15,000 per person/ $30,000 per occurrence. What this means is that if you injure one person the most the insurance company will pay that person is $15,000. If you injure more than one person, the most the insurance company will pay under the policy is $30,000 to be divided among the various claimants. Obviously most of us want and try to carry more than the statutory minimum. The statutory minimum policy also has $5,000 for property damage. With the prices of cars and the amazing costs of repair, it is quite likely that in a multi vehicle accident, more than $5000 of property damage will be incurred.  This is why insurance carriers offer more coverage, for greater premium charged to the consumer.

Other coverages available in your typical automobile policy are comprehensive and collision. These coverages are available for your vehicle. They are optional coverages depending on the vehicle. If you vehicle is being financed, this coverage will probably be mandated by the financing agency. Typical comprehensive claims could be a windshield being broken in a hailstorm or a collision with an animal. One would think that a collision with an animal would be under collision coverage, but it is under comprehensive coverage.  Collision claims which we are most familiar with are the cost to repair your vehicle when it has been damaged in an accident. This is where we find out what our “deductible” is. A deductible is the portion of the claim that you will pay. Therefore, the carrier gets to “deduct” your portion of the claim from its obligation and then it pays the rest.

Other optional coverages include Medical Payments and Uninsured (UM) and Underinsured motorist coverage. The insurance carrier will pay your and/or your passengers reasonable bills incurred by the covered automobile accident. We’ve all heard that many motorists in the Los Angeles are uninsured. If you purchase this optional coverage from your insurance company will pay you the policy limit under this type of coverage once it has been determined that the other driver is indeed uninsured. The source of this coverage comes from Insurance Code Section 11580.2 and its subparts.  Bear in mind, that once you make a claim for this type of coverage your insurance company steps into the shoes of the uninsured motorist (UM) and will treat your accordingly. They will in all likelihood conduct pre-trial discovery against you (deposition, written discovery, medical examination, etc). Your claim in the UM context is resolved through arbitration rather than trial. The decision of the UM arbitrator will be binding on the parties.  UM coverage requires there to be physical contact between your vehicle and the vehicle of the uninsured motorist. The contact does not have to be car to car, it can be something from the UM car that either strikes your car, or that your car strikes it. For example, a tire from the UM car fall off and is bouncing down the road and hits your vehicle. This would satisfy the “physical contact” requirement of the statute.

UIM (under-insured motorist coverage) is similar to UM coverage. The sole difference is that it does not come into play until you have exhausted the policy limits of the responsible party. For example, if you have a claim that is worth $100,000, once you have exhausted the policy limits of the responsible party (in my example $15,000), your UIM carrier would be responsible for $85,000 if you have $100,000 UIM limits. In order to make a UIM claim, your policy must be higher than the policy limit of the responsible party. If for example, your policy limit and the policy limit of the responsible party are the same, you cannot undertake a claim for UIM benefits.

Another type of coverage is an umbrella policy. As the name implies, this is a policy over and above your liability and/or UM policy. If for example, you have a $1 million umbrella, this would be over and above your underlying policy limits for the particular type of coverage.

So when people use the term “full coverage”, this merely means they have complied with the statutory minimum and they may not have the right kind and amount of coverage available to them. The key is understanding what they need and to ability to ask the right questions to obtain the proper type of coverage.

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