Step 10: Do I Really Have to Pay for That?

Thus far, under Money Fundamentals, we have been talking about the expenses that you cannot really get around — housing, food, transportation, utilities, taxes — these are things, for which you cannot really avoid paying. In order to become wealthy, you need to keep your cost of living as low as possible. Yet, you cannot avoid buying insurance. So the move here is to research the insurance laws for your state and find out exactly what kind of car insurance is mandatory and what type is not. The internet has made this information fairly easy to find. Do this research yourself, rather than asking your insurance agent.

Liability Insurance

This covers the “Oh no, I hit someone!” situation. This is where you have gotten into a car accident and it is your fault. Now you have to now pay for someone else’s bodily injury, the damage to their car, and the damage to anyone, or anything else, you hit.

In buying liability insurance, the first question is how much should you buy? Well, to be perfectly cynical, the coverage you need depends on how much you own that can be seized if you lose a lawsuit. If you are responsible for a car accident, there will come a point where the car repair bills will be known, the medical bills will be totaled, and the victim’s pain and suffering will be assigned a value. Now, if that damage total exceeds your car insurance policy limits, you are on the hook for the difference.

Say you have liability insurance in the amount of $30,000.00 in bodily injury coverage and $15,000.00 in property damage coverage. But the other party, who you wrongfully hit, has $30,000.00 in medical bills, and $90,000.00 in pain and suffering, and damage to their car of $10,000.00. Well, that totals up to $130,000.00. Your total liability coverage is $45,000.00. Their total damage bill is $130,000.00. While you may be able to negotiate down the pain and suffering, you might end up on the hook for $85,000.00. The injured party can garnish your wages, put a lien on your house, and attempt to seize anything else you own in order to cover the damages.

If you have property and money, then you need to get as much insurance as you have in asset and income value. Get the amount in bodily injury coverage that is equal to the value of what you own, your income, and whatever else, which can be seized in a lawsuit.

If you have money and own property, then you need to get at least as much insurance as you own in asset and income value.
Ms. katherine

Comprehensive and Collision

States vary and you need to do your own research for your state. But in general, every state is going to have something similar to this category of coverage. Comprehensive and collision insurance coverage are not required by law in California.

These categories only cover property damage to your vehicle; this bud’s for you. First, what is collision insurance? — for when you collide with another car. This coverage will pay for the damage to your car, whether or not you are at fault. Comprehensive insurance is for everything else – theft, vandalism, natural disaster, falling rocks, etc.

It is a state law requirement in California to have liability insurance. If someone hits you and it is their fault, their liability insurance will pay for your bodily injury and property damage. If someone hits you, you can sue the other driver under their liability policy, which they are required to have, for your medical bills, pain and suffering, loss of income, etc.

Health Insurance

These coverages do not cover your own bodily injury. You need health insurance for bodily injury medical bills. Your options are the health exchanges under the Affordable Care Act, insurance through your work, and private insurance. Insurance broker Lynnie Stewart, a licensed insurance agent, through HealthMarkets.com is a very competent, knowledgable, and caring agent, in the health insurance market and her services are highly recommended.

Comprehensive and collision coverage continued; these coverages also have a deductible. What is a deductible? This is the amount that you have to pay first before the coverage even applies to the damage. The insurance company reasons that, even though you are paying for the insurance, you should pay yet another amount before they have to pay. Hmmm? Is this because that if you have to pay yet some more money, you will be discouraged from hitting something? Isn’t hitting something enough of a penalty? I never really understood why deductibles exist; the payment of the insurance always seems painful enough to me. But here is one line the insurance company will give you – have a high deductible and you will have lower insurance payments! Yet if you do that, you might end up paying all your car repair bills anyway because your deductible is so high. And you will have paid all to those premiums to them anyway! No wonder why they tell you to have high deductibles!

You can choose not to have this kind of coverage at all. You can set aside enough money to pay for car repairs in the event your car gets damaged. You can set aside enough money to pay for another car, if your car is destroyed. The more expensive the car, the more you need to set aside.

If you have a car lease, you will usually be required to carry comprehensive and collision insurance and the car lease company will have minimum limits as well. That is another reason not to lease a car – the car lease company will dictate what type of insurance you have and how much. So when you lease a car, don’t just look at what the lease payment is, find out what the insurance will cost too. It is better to own your car outright. Then you get to decide what kind of insurance to have, as you head to the beach in your paid off wheels.

Emergency Road Service

In California, emergency road service coverage is not required by law. Pass this one by if it comes through an insurance company. Why? No tow truck driver is going to come out to wherever you are stranded, pick up you and your damaged car, get you safely to a car repair shop, take you home, and then bill your insurance company. They want payment at the time of service. Repayment of the towing bill requires that you submit a claim to your insurer and it does not apply to the deductible. You just have to wait for reimbursement. In the meantime, you paid out of pocket any way.

Instead, use Triple A. Keep the card they give you, that has your account number and their 800 number, in your wallet. When you get into a jam, they will come and get you, wherever you are. One reasonable yearly fee and you are covered, no questions asked. They will come out even if you just lock the keys in your car. And for a true Hallmark moment, maybe more than one gal has married the Triple A guy? Sorry, I get carried away.

Rental Car Insurance

In California, this coverage is not required by law. You only need this if you have only one car and will need a loaner in case you get in an accident. If you are with a partner and they can help you with rides, then there is no need to have this additional expense.

Uninsured Motorist Bodily Injury and Property Damage

In California, this coverage is not required. This covers you if you get hit by a jerk, who is driving around with no car insurance. But remember, you are going to have to prove that they had no insurance. Above all, the second you get into an accident, get the license plate. If you don’t get the license plate, the insurance company will have no way of determining that they are an uninsured driver. If you suffer a hit and run and you have no information on whether they had insurance? No coverage. If you have their license plate, (or their vin – vehicle identification number), your insurance company can check and see if they have coverage, and if not, this category would apply.

On bodily injury, this covers your medical bills up to the policy limits. If you have adequate health insurance, then you do not need this type of coverage to cover your medical bills. If you have inadequate health insurance, then you need this kind of coverage for your medical bills.

On bodily injury, you can use this coverage to make a claim for pain and suffering. But you will have to prove your pain and suffering to your insurance company.

On property damages, if you have collision insurance, you don’t need this for the damage to your vehicle. If you don’t have collision insurance, you need to have enough in your savings to pay for car repairs, or if your car is totaled, by an uninsured driver.

Tender the Defense

And one final note, here are the three words that will make your life a lot easier: “Tender the Defense.” As a part of every car insurance policy in California, the car insurance company is required to defend you if you have been sued.

If you get sued arising out of a car accident and you were covered by insurance, write your insurance company, asking that the insurer defend you in the lawsuit. This is legally called “tendering the defense of the action.”

Write to the insurer, explaining the date of the accident and showing that you had insurance with them on the date of the accident. Tell them you wish to tender the defense of the action to the carrier.

The insurance company is required to defend you in such an action. If the insurance company does accept the defense, but does so under a “reservation of rights”, and begins to defend you in such a way such that there will be no coverage under the policy, demand that they pay for another attorney, one of your choosing, referred to as Cumis counsel. Outside of California, the concept of a conflict of interest still holds. The insurance company cannot defend you in such a way that there will automatically be no coverage; that is a conflict of interest. That is inequitable and the courts will listen to an argument that such a strategy is unenforceable.

The internet is a great resource on insurance coverage information. Be proactive. Save yourself as much money as you can.

Nothing in this article is intended as legal or financial advice. All situations are different. Laws vary from state to state. Do your own independent research.

Now it’s time to go on the attack and eliminate all other unnecessary overhead – continue reading and find out what they are and how to eliminate them!

If you need help finding the right insurance, I have received great and consistent help from Lynnie Stewart.