There can be a lot of implications to being involved in an automobile accident. What if you, or a passenger, is injured? Will your auto insurance premium go up? How and where should you get your vehicle fixed properly? These are all good questions, but what most of us probably aren’t thinking is… what happens if I get sued? It can happen, good thing your auto insurer realizes this potential is real and has you protected.
You’ve Appointed Your Insurer
When you accept a new auto insurance policy from an insurer, we typically don’t realize something very important; in doing so, you are appointing the insurer to act on your behalf in any lawsuit against you, or any other insured person, that is the result of owning, using, or operating your insured automobile. This extends to auto accidents in Canada, the United States, or any other jurisdiction identified in the Statutory Accident Benefits Schedule. Bet you never realized this, or even gave it any thought.
Appointing the insurer to this role means it will provide and cover the cost of your defence, including investigation costs. You also give the insurer the right to investigate, negotiate, and even to settle any claim out of court at its own discretion. This may come as a huge surprise, but it’s true.
Selecting the Proper Liability Insurance Limit
The fact that being sued is a real threat should be part of your consideration when selecting the proper liability insurance limit under your policy, you need adequate protection. That’s because if you are sued for more than what you are insured for, then you may have to hire legal defense out of your own money to protect against this additional risk. It’s important to remember that the most your insurer will pay for in any one incident is determined directly by the amount of coverage you buy (that is, over and above legal costs and post-judgment interest).
Erie Mutual Insurance recommends consulting with a professional insurance advisor who can explain the benefits and cost of your insurance purchase decisions. Are you wondering now if you have enough coverage?
Keep in mind that it’s smart to buy more than the minimum limit required by law since this amount may not be enough in a real-life situation. An advisor will explain to you any cost to increase this limit, as well as the benefits of such a decision. While you’re at it, ask the advisor about personal umbrella insurance; this extra coverage will protect your liability beyond what your auto insurance policy may be able to do.
Educate yourself about the need for an increased liability limit, and ask your insurance advisor to review your policy annually. Doing so will help to ensure you have the right coverage and limits under your auto insurance policy, even if you’re being served by the courts.
Article Written by Darcy Johnson
Erie Mutual Insurance Manager (Sales, Marketing & Business Development)
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