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Auto Insurance in Georgia

The Basics of Auto Insurance in Georgia

Because liability coverage is mandatory the insurance company is the one that ends up paying the victim in the vast majority of cases. The insurance company will handle the negotiation and litigation of the injury, even though the legal claim is against the person who hurt you, not the insurance company. When there are multiple, overlapping policies in play the claims have to be structured in such a way as to maximize recovery. Do not risk being undercompensated; if you have been harmed by the negligence of another person click here to speak to an attorney. The consultation is free. For more information about all the types of harm that can occur as a result of a car wreck, check out the posts in the Damages category.  

If you own a car in Georgia it is important to know the minimum insurance requirements and the different types of insurance available to you. This blog post will go over the major types of insurance and answer some common questions about car insurance.

Liability Coverage

Liability insurance protects the driver, and sometimes owner, of a car if they are sued for harming another person in a car wreck. If you cause a wreck liability insurance pays the damages of the person you harmed. Conversely, if someone else causes a wreck their liability insurance pays your damages. Liability insurance, like all car insurance, is subject to limits of coverage, or a maximum amount the insurance company will have to pay out. This is often broken down into three categories:

Bodily Injury Liability (Per Person) is the maximum amount the insurance company will pay a single person for bodily harm suffered in an incident.

Bodily Injury Liability (Per Occurrence) is the maximum amount the insurance company will pay to all involved persons for bodily harm suffered in an incident.

Property Damage Liability (Per Occurrence) is the maximum amount the insurance company will pay to all persons for damage to their property.

Remember, liability insurance pays the injured driver, not the at fault driver. Georgia requires all vehicles to have a minimum amount of liability coverage. As of June 20, 2017 the minimum liability coverage is 25/50/25. This notation means the minimum coverage is $25,000 per person of bodily injury coverage, $50,000 per incident of bodily injury coverage, and $25,000 per incident of property damage.

Physical Damage Insurance

Physical damage insurance protects your property (your car) from physical damage regardless of who is at fault for the damage to your vehicle. It is not required by law, but may be required by your lender if you owe money on your car. Physical damage insurance covers two types of damage, collision and comprehensive. Collision coverage will pay you the cost to repair or replace your car if it is damaged while being driven, regardless of fault. Comprehensive coverage will pay you the cost to repair or replace your vehicle if it is damaged in any scenario not involving being driven (theft, vandalism, fire, etc.).

Uninsured Motorist Insurance

Uninsured motorist insurance, commonly known as UM, protects you and your household from damages caused by another party who is not insured or who has inadequate insurance. This category includes hit and run drivers who are not caught. Uninsured motorist insurance is not required but is highly recommended. There are two types of uninsured motorist insurance; add on and reduced. Add on uninsured motorist insurance has a coverage limit equal to the amount of liability insurance plus the amount of uninsured motorist insurance. Reduced by uninsured motorist insurance has a coverage limit equal to the amount of uninsured motorist coverage minus the amount of liability coverage. Three examples are below:

Adam has 25/50/25, Beth has no UM
Adam causes a car wreck that injures Beth. Beth’s damages are $120,000. Adam has the state minimum of 25/50/25, thus he has $25,000 in liability insurance. Beth can collect a maximum of $25,000. The rest of her bills are unpaid, since $120,000 - $25,000 = $95,000 in unpaid bills.

Adam has 25/50/25, Beth has 25 UM reduced by
Adam causes a car wreck that injures Beth. Beth’s damages are $120,000. Adam has the state minimum of 25/50/25, thus he has $25,000 in liability insurance. Beth can collect a maximum of $25,000 from Adam. The rest of her bills are unpaid, since her $25,000 of uninsured motorist coverage is reduced by the liability coverage; $25,000 - $25,000 = $0 in additional coverage.

Adam has 25/50/25, Beth has 25 UM add on
Adam causes a car wreck that injures Beth. Beth’s damages are $120,000. Adam has the state minimum of 25/50/25, thus he has $25,000 in liability insurance. Beth can collect a maximum of $25,000 from Adam. Beth also has add on uninsured motorist coverage, thus she can collect an additional $25,000 from her own uninsured motorist policy. Her unpaid bills are thus $120,000 - $25,000 - $25,000 = $70,000.

I always advise people to buy add on UM insurance.

Other Types of Auto Insurance

Medical Payments Insurance pays for medical bills incurred as a result of a car wreck. This coverage is not required by law and pays out regardless of fault. People with high deductible health insurance plans or high copays may find this is a very worthwhile investment.

Disability and Life Insurance policies are sometimes sold by car insurance carriers. These are auto wreck only versions of the more common disability and life insurance policies and are usually overpriced. If you are interested in life insurance or disability insurance you are probably better off buying a traditional policy, not an auto only policy.

Gap Insurance pays the difference between the loan balance on your car and the actual cash value of your car. This situation only applies if you owe money on your car (car loan/car note) or if you lease your car.

Umbrella or Excess Insurance is additional liability insurance that pays out after the underlying policy has been exhausted. Excess coverage is usually sold as a package deal, with auto, home, and excess coverage sold together. Excess coverage is available for very large limits.  

How much insurance do I need?

That is a very complicated question. I will offer some general numbers below, but the amount of insurance you need depends on your personal risk tolerance, what other kinds of insurance you have, and your personal finances. A good insurance agent will ask you questions about your finances and your household to determine a recommended amount of insurance for you. 

The most common advice seems to be that a person should purchase at least 100/300/100 in liability insurance, with add on UM included. You should also consider medical payments coverage in an amount equal to your health insurance deductible. If you car is worth more than $10,000, or you owe money on your car, comprehensive and collision coverage are usually recommended. For cars worth less than $10,000 comprehensive and collision coverage are debatable. Finally, if you owe money on your car you should consider gap insurance.

What happens if I do not have sufficient insurance coverage?

If you are the liable party in a car wreck, that is you caused the wreck, you are on the hook for all damages stemming from the wreck. If the injured party sues you in court and is receives a verdict in excess of the available insurance you become liable for the difference.

For example, if you have $25,000 in insurance and the jury returns a verdict of $40,000 then the insurance company will pay $25,000 and you will be required to pay the remaining $15,000 out of your pocket. If you are unable or unwilling to pay the injured party may seize your property, garnish your wages or bank accounts, and even drive you into filing for bankruptcy. Again, this is why it is important to speak with an insurance agent when deciding how much insurance coverage you need.

Can there be more than one insurance policy in effect at the same time?

Yes. In some cases there are a multitude of different insurance policies in effect with full or partial overlaps in coverage. It is important to have an attorney who understands how to structure your demands in order to maximize recovery. In one case I handled recently proper structuring of the insurance demands more than doubled the amount recovered for the client.

When purchasing car insurance it is important to work with an experienced and trustworthy insurance agent and make sure you understand the types of insurance you are buying. If you are involved in a car wreck an attorney can ensure that you maximize the amount of insurance available to you. The consultation is free.

Robert Cairns