Minimum Insurance Requirements Are Insufficient
Mennonite insurance, Ryder insurance, Progressive Insurance and others focus on selling the minimum insurance required by law, which is currently $15,000, and has been since 1990.
In that same span of time, health care costs have gone up 351%. According to statistics from the Center for Medicare and Medicaid Services as expressed in this article: https://www.thebalance.com/causes-of-rising-healthcare-costs-4064878 in 1990 the average person used $2,843 of their income for health costs, and in 2015 that number had risen to $9,990.
Carried forward, that would mean if $15,000 was deemed sufficient mandatory insurance in 1990, then the implied reasonable insurance amount in 2017 would be approaching $53,000. So, the resulting shortfall in available funds to cover your recovery from a motorcycle accident averages around $38,000.
Where does that money come from if you get into a motorcycle accident?
For those of you who have never stopped to examine the insurance model, it goes like this:
Your agent sells you a policy worth X dollars of coverage. This coverage is available to you if you ever get into an accident. It does not accrue (build over time) in an account. It is a set amount available to you in case of an accident.
In theory, every person who operates a motor vehicle has insurance. Therefore if someone else is the cause of your accident, their insurance would pay for the damages first, including your medical bills, lost wages as your injuries heal, and any reimbursements for the inconvenience the accident causes in your ability to enjoy your life. Then your own insurance amount would kick in to cover the remainder.
That is the theory. Then the real world enters into the picture. Many people don’t buy any insurance. But they drive anyway, with the thought, “I won’t get into an accident”. But, they do cause accidents. Those people have no savings from which to draw to reimburse you. It stands to reason, if they can’t afford insurance premium payments, they almost certainly don’t have the money set aside to cover an accident.
So You Take Steps to Protect Yourself
To compensate for people who don’t buy the required insurance, a good insurance agent will offer you “uninsured motorist” coverage, which also includes “under-insured motorist coverage”. Now, already paying your fair share as required by law, you may decide you don’t want to pay someone else’s share too.
Well, that’s one way to look at it. The other, more prudent way to look at it is that you are buying an extra amount to insure yourself such that you have enough resources to draw upon if an accident occurs.
How much do you need?
Six figures wouldn’t be unreasonable, given the current medical establishment penchant for over-billing and the damage that your body can sustain at speeds which motorcycle accidents occur.
The Legislature Could Raise the Minimum
Why is the mandatory motorcycle insurance too low to cover the average injury costs of an accident?
You would have to ask your Commonwealth representatives that question. Since 1990 they have steadfastly voted that the $15,000 minimum will remain the amount, despite the rising medical costs in Pennsylvania.
So, most people don’t really think about it, they comply with the current law and simply purchase the minimum required policy.
Back to our discussion about what the minimum requirement means to you.
Let me paint you a real-world picture of how this all works.
You have purchased $15,000 of insurance, as has Joe, a Mennonite antique dealer. He can afford more, but the law only requires $15,000.
When Joe hits your motorcycle with his car after running a red light, you end up in the hospital with multiple fractures, pavement burns over much of the left side of your torso, and a concussion. You have a hospital bill of $175,000 and miss 2 months of work while healing, resulting in lost wages of $10,000 and end up with post concussion syndrome that requires you to shift to a less demanding position at your company.
The new position pays $1,000 less per month than your old job. You still have 10 years until retirement. That’s ten years at $12,000 a year, or $120,000 less you have to live on after retirement.
Joe’s insurance plus your own gives you $30,000 to put towards what you owe the hospital.
So, as your motorcycle lawyer, I present the remainder to Joe as a demand to settle the whole accident, which was his fault. He naturally says, “no, my insurance is only $15,000.” So, we have to sue him for the remainder.
Now, we might very well win, and if his antique dealership is doing very well he might be able to pay you. But, chances are he is not quite that successful that he has that kind of money. So we have to go after his wages, and get payment over time.
This is one reason why you hire an experienced motorcycle accident attorney. Another is to have an agent to negotiate your medical bills to a reasonable level. Typically I can get hospitals and medical professionals to agree to accept lesser amounts as full payment.
I not only advise you after an accident, but I am starting today to advise you to take precautions.
- Buy as much uninsured motorist insurance as you can afford. An average accident can cost you six figures to get your life back to normal.
- Right now, before you finish reading this article, either call me at 888-292-5352 to become familiar with the process, and to get pre-accident advice on insurance and safety tips and to become comfortable with the concept that I will be your advocate after an accident – more so than your insurance agent.
- Put my contact information in your phone, the one that you may have in your possession if you are in an accident. List it under “motorcycle accident attorney, so in the aftermath of an accident you don’t have to try and remember my name. Believe me, it can be utter chaos and confusion after an accident, and you will want to call me either first, or immediately after you call 911.
Here’s hoping you never have to call me from the scene of an accident. But if you do, you can reach me 24/7 at 888-292-5352 (that’s 888-cycle-law).
I’d prefer to get to know you with a quick call to introduce myself to you and to give you a no obligation review of what I do, and my recommendations on insurance that will protect you in an accident.
My number one wish is that more people would take their insurance amounts to heart before they need to rely on it put their lives back in order after an accident.
Have a safe Labor Day Weekend!