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INJURYwise

Renewing auto insurance

Every year when you renew your auto insurance, the insurance agent asks you a few questions. You initial and sign the form and if you are like most of us, you do not put a lot of thought into what you are purchasing only that you need insurance to drive and you want to pay as little as possible.

If you are purchasing auto insurance for a standard license (class 5), the minimum third party liability coverage you are required to have in British Columbia is $200,000. As the premium for this amount is the lowest, many people opt for this amount and the option of purchasing more coverage (up to $5 million with ICBC) is not considered. What most people do not realize is that the increase in your premiums to purchase more coverage can be well worth the expense.

So what is third party liability coverage? If you are in a car accident and it is decided that you are at fault, then you will be responsible for paying for all damages resulting from that accident. This includes property damage, such as damage to vehicles or buildings as well as damages for those who were injured in the accident, such as pain and suffering, loss of income, medical expenses etc. If you have no insurance, or you breach your insurance policy (i.e. drinking and driving) you will be personally responsible for paying these damages, in addition to significant fines. If you have third party liability insurance, which hopefully you do, your insurance will cover the damages up to the amount of third party liability coverage you have purchased.

If you purchased $200,000 coverage and you are in an accident that is your fault and a passenger suffers minor soft tissue injuries for a total of $15,000 damages, your only responsibility will be to pay your deductible as your insurance will pay out the rest. If, on the other hand, you have $200,000 coverage and you are in an accident that is your fault and some of the passengers are moderately injured for total damages of $300,000, you will pay your deductible and your insurer will pay out the $200,000 coverage to cover a portion of the damages however, you will now be personally responsible for the remaining $100,000 in damages. If judgment is obtained against you for the damages incurred, they will have 10 years to collect the balance of the judgment from you. In other words, you will either be forced into bankruptcy or be responsible for a significant debt for a long period of time. With this second example, if you had purchased insurance coverage for anything greater than $300,000, your insurance would pay out the damages and your only responsibility would be to pay your deductible.

In a serious car accident, particularly where there are more than two passengers involved it is not difficult to exceed damages of $200,000. If you do not want to be personally responsible for paying damages resulting from a car accident, serious consideration should be given to the amount of third party liability insurance coverage you carry. Further, ICBC is not the only carrier of third party liability insurance. While you have to buy your basic insurance from ICBC you can purchase excess third party liability insurance from other insurance companies.

Note that where you are not at fault for an accident and the other driver is under insured, as in the example just given, your basic insurance with ICBC comes with $1 million under insured motorist protection (UMP). This insurance will be triggered to cover the remaining portion of your claim that the driver at fault is not insured to cover. However, for a cost of just $25 a year you can increase your UMP coverage to $2 million.

Important Note: The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Keri Grenier is an experienced personal injury lawyer based at Murphy Battista LLP's Kelowna office. She also holds a B.A. in psychology. Her practice focuses on helping people who have been injured in motor vehicle accidents or due to the negligence of others.

In her column, Keri provides practical information about personal injury claims in a format that is simple and easy to understand.

Email: [email protected]

Website: http://www.murphybattista.com
 

Twitter:  http://twitter.com/KelownaLawyer



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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