What is Vital Coverage in an Auto Policy? with Eric P. Evans, Chrysalis Insurance Company

Insurance Agents Orange County

Eric Evans – Insurance Agent Orange County handling Property & Casualty Insurance

Eric: Well, good morning, everybody. Some of you brought your homework. Some stuff I brought to you. I did have blanks, and I forgot to take care of the front row here.

Business Growth Innovators Member: I have an extra one.

Eric: With the blanks. Yeah, bring them up, if you don’t mind. As far as the liability coverages, hopefully while you’re eating or whatnot, you’re doodling on here. So we can kind of talk about what is vital coverage in an auto policy.

So before we go into that, what I can do is think about the number. What is the number? So there’s a number everybody around this room has. And there’s been these big retirement people that talk about everyone has their number.

So your number is, “How much money do I have in the bank, how much equity do I have in my home, how much do I have in retirement, and how old am I?” Meaning, am I in the spring, so to speak, season of my life? Am I earning wages for the next 30 years.

So think about that. Don’t worry about the spring part, whatnot. But anyway, think about the number. Is it $1 million? $2 million? $100,000? $10? You just think about what your number is, and that’s what we need to focus on, because that is what you have to lose. And that’s what I always talk about. When people call me on the phone and they talk about what do you have to lose.

Self-service insurance companies. Geico, Progressive, Esurance, Auto Club, to a certain extent. They’re kind of the doom’s creators of insurance. In my email I sent yesterday, I alluded to the fact that 10 minutes could save you $100,000. That was very intentional, because Geico talks about 15 minutes can save you 15%.

The problem is, the people who call, whether it’s anyone in this room or whomever, they say, “What’s the least expensive thing for my situation?” Well, that’s eral dangerous when you’re talking to a person in sales, right? Because they’re going to give you the least… no.

You go to the Toyota dealership, say, “What’s the least expensive car I have?” Well, it’s an AM/FM radio Toyota Corolla, for sale under you crank up your own windows. That’s the kind of insurance you’re going to get, when you really want a Lexus 300 horsepower, six cylinder, with leather, everything else. Anyway. I don’t want to digress. 25% of my time is gone.

Business Growth Innovators Member: Too late.

Eric: Are you going to hand those sheets out, Chris? You said you would hand those sheets out. You got extras for the front?

Business Growth Innovators Member:  I have one.

Eric: Oh, there’s some right on the table, right up there. Please hand them out for the front? But anyway, so these people can take notes.

All right, so I want to talk about what’s a vital coverage, because that’s the title of this. So if you’re looking at the coverages I gave to you, or your little cheat sheet, you have bodily injury liability, also known as BI. You have property damage, also known as PD. You have medical payments. Some of you have some. Some of you do not. You have uninsured motorists. All right? Uninsured motorist, bodily injury.

You have a comprehensive deductible. Most people generally have a $500. Some have a little bit less. Some have a little bit more. And you have collision. Again, most people have about $500. Some have less, some have more.

And then there’s others. There’s a towing, there’s a rental reimbursement, all that stuff.

So what I talk about, what is vital? What I mean by vital: what is going to injure you and take you to the financial horrors of the pits of hell, so to speak, of financial distress? That is having poor BIPD and poor uninsured motorist coverage. If you had no comp and collision on your 2013 car, worst case scenario, you get a collection call, collection notice. They sue you or not, or whatever. You get a little charge off on your credit for 30, 40, 50, whatever grand your car is worth, if you’re financing it.

You’re not going to lose your house over it. You’re not going to be forced into bankruptcy. You’re not going to be dragged into a personal injury case if you’re in a situation.

So bodily injury, very, very important. Just like Dawn alluded to the fact that most property owners don’t change the rents of their tenants over time, most people, most of us, I included, until I learned about the perils of that, don’t change the limits of your insurance. You say, “I’ve got high limits. I’ve got 100, 300.” Well, what does that mean?

So if you have this little paper in front of you, circle that first number, 100, or whatever that number is. Just circle that, okay? That is the maximum amount of money that is paid if you injure somebody with your vehicle. The maximum paid. So if you have a $25,000 number, a $15,000 number, and you hit a kid on a bike, you know what you get from your insurance company? You get a letter, and the letter says you will likely exceed the limits of your insurance. You’d better hire an attorney.

I’ve seen those letters when I was a Farmer’s guy. Not for my clients, but I’ve seen them. Oh my gosh, how’d you like to get that letter from your insurance company? Kind of gut-wrenching. Ever paid a retainer? $15,000, $20,000? That you write out of your checking account. That’s just the beginning.

Business Growth Innovators Member: But we take credit cards.

Eric: There you go. There you go. So that’s the maximum for one person. You think about, okay, think about your number. What’s your number? That’s what you have to lose. If you’re in your early, mid 40s and 30s, you’ve got a lot of years left to go. Personal injury attorney’ll say, “Okay, all right. You may not have a million dollar umbrella on your policy, but we’ll take your future earnings. We’ll just take care of that, and not kick you out of your house.” You think about that for a second. It could be very sobering.

The second number, so if I say 100, 300. 300’s the maximum for the accident. So if you hit the minivan instead of the kid on the bike, you hit the minivan with, say, four people in it, the max on that vehicle will be $300,000. So they get to fight between your $300,000.

If you hit a person, let’s say they’re a professional. And I heard a case about this. A guy had poor insurance, and the other vital coverage I’m going to talk about — I’d better get to it — is your uninsured motorist coverage. Whether you are, say, a bike rider, or whether you drive your car, that’s the most overlooked, one of the least expensive coverages you have, yet one of the most vital. I’d put that almost tied up with the liability coverage.

Why? Because we live in an area that’s very permissive to uninsured people, unlicensed people. You know, they’re handing out licenses to illegal aliens, or undocumented, whatever term you like to use. Now, that doesn’t motivate people to get insurance. I’ve got clients — they don’t have to be undocumented or legal — that have allowed their insurance to lapse. And I think, “Get your insurance reinstated, please, please.”

Just because it’s so important. Because if you get hit, think about what you earn in a year. What if you can’t work for three months? What if you can’t do your job? Your jaw’s wired. You have two broken legs. What are you going to do? Who’s going to pay for that?

If a guy who has a lapsed coverage or $15,000 coverage hits you. You know, people say, “Oh, my medical coverage is up.” I have no physical therapy in my policy. I don’t know about you guys. I learned that the other day. I have no PT on my medical insurance that I pay $800 a month for. Zero.

Business Growth Innovators Member: It’s a joke.

Eric: It is. It’s a joke. So that’s going to come from your policy. Your uninsured motorist coverage. You should have at least the coverage that you have of your bodily injury property damage, or actually your bodily injury limit. If you have 100, 300, you know what your max uninsured motorist is? It’s $100,000.

If you think, oh my gosh, if I couldn’t work for three months, or if I had to walk with a limp for the rest of my life, or I had some brain injury that allowed my speech to slur every time I spoke, what would that do to your career? You think about that. Is $100,000, after the medical insurance people take their cut on your UM policy, is that going to be enough? You need probably $250,000. How about $500,000? And an umbrella, a million dollars, that will take care of your uninsured motorist coverage.

So vital coverage is two, BIPD, uninsured motorist. Those are your vital. Hey, your car, like I said, your car’s a car. It’s cheap metal. They get repaired. If you didn’t have it, hey, bam, up yours. I’m more important. Whatever.

I’m not advocating that. But point is, the two vital coverages are your BIPD, uninsured motorist. If you haven’t looked at that in a while, you think 100, 300’s a great limit, talk to your doctor friends. Talk to someone who has had a trauma in their life lately. Fell off the ladder. Ask, “Hey, can I just see a copy of your bill that arrived in the mail?” Because they will send them to you.

Just look at how much it costs just for a three-day stay in the hospital. Emergency room, you’ve got a little surgery, it’s over 100 grand. It’s 200 grand. It’s ridiculous how expensive it is. And it’s only getting worse. It’s only getting worse.

So anyway, those are the vital coverages. So back to your number. You need to look at your number and take that seriously. And even if you have no assets. “Eh, I’m just renting.” Again, you look at your future earnings. Everyone in this room should have at least $100,000 in coverage, whether you’re living on Uncle Joey’s sofa, or whatever the story is.

But the most important thing: we’re all wage earners. We’re all people who have a lot to lose if we were in a bad pickle. And we can never predict when we’re going to be in that bad pickle. You know, whether we’re rear-ended, whether one of us gets injured and it’s permanent disability.

You know, Social Security, how much your Social Security is if you get permanently disabled? $300 a month, $600 a month? How far is that going to go? Not very far at all. It’s your uninsured motorist coverage. That’s extremely important. That’s what I always tell people.

Hey, I don’t care about what assets you have. “Oh, I’ll never get sued!” Uninsured motorist. Bounce it up.

Business Growth Innovators Member: So I’d like to add one… the biggest thing… I see a lot of people that are injured in auto accidents, and what happens is that these airbags are creating more problems. Especially in older TBIs, traumatic brain injuries. But I would recommend, Eric, the cheapest part of the policy is your medical payment.

Eric: Yeah.

Business Growth Innovators Member:  have $10,000 of medical payment.

Eric: Me, too.

Business Growth Innovators Member: I pay… what do I pay, $35.12 a year?

Eric: Yeah.

Business Growth Innovators Member: I’m upping that. By the way, a lot of people that he’s talking about, Geico, All State, Progressive, they now have deductibles on the med pay, or they have excess. Excess is a nightmare. I mean, oh my gosh. People don’t have any clue. But that is the job of an agent. To really make sure. So I bet that med pay is the most important thing for you to have.

Because no matter if you’ve got health insurance or not, you don’t have any deductible, you don’t have any copays, and you get to choose your provider. And it helps [inaudible 11:31]. It helps Don on the long run, too, because he can always negotiate that.

Eric: Right. And if you want… and I’ve often thrown this out. If you want counseling in your own policy, I’m happy to do that. Obviously I’m doing it today. Happy to do that on a one-on-one basis.

Business Growth Innovators Member: If you don’t think that that’s justification enough… Go to the surgical center, right around the parking lot. You’ll see six-digit cars out there. Now, how did they get that? There you go. There’s the real proof.

Eric: Yeah. Well, yes. One last one.

Business Growth Innovators Member: Is underinsured different than uninsured?

Eric: We don’t really… in this state, we don’t really do underinsured. It’s just like the same thing. In some states, it has separate limits, uninsured motorist versus underinsured. We don’t, in the state of California.

Business Growth Innovators Member: You touched on umbrella policy.

Eric: Yes.

Business Growth Innovators Member: Is that attached to your homeowner’s insurance, or your…?

Eric: It covers the whole thing.

Business Growth Innovators Member: No, but when you order it, is it a separate policy, or do you attach it to your auto insurance?

Eric: It’s a separate policy, but it covers the autos, home, and kind of you anywhere. Thank you. [applause]

Chrysalis Insurance Company
3001 Red Hill Ave., Ste 2-226
Costa Mesa, CA, 92626
Bus: 714-464-8080
Cell: 949-633-5501
Fax: 949-271-5002