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The lawyers at SmithBush LLP deal with a broad spectrum of consumer problems every day, but the common denominator among them all is that they involve insurance coverage issues. Surprisingly, most clients really do not understand the types of insurance they have--or have not--purchased, so they are often disappointed by how their financial options are limited in their claims. To help consumers evaluate their automobile insurance, we have put together this factsheet as a basic description of common types of coverages found in Louisiana automobile insurance policies. It's really a good idea to discuss your insurance needs with your agent each time you purchase insurance or renew an existing policy. Be sure to ask questions, and take the time to learn what you are--and are not--paying for. It may save you a lot of heartache if you are involved in an automobile collision.
Louisiana, like most states, requires everyone driving a vehicle to have liability insurance. In fact, driving without insurance is a crime. Automobile insurance policies have many different coverage options, some of which are required by law, and some of which are not.
The Louisiana Supreme Court describes the "Louisiana Motor Vehicle Safety Responsibility Law," found in Louisiana Revised Statutes 32:851-1043, as providing a mandatory, comprehensive scheme designed to protect the public from damage caused by motor vehicles. The Louisiana Motor Vehicle Safety Responsibility Law has, as its purpose, "the elimination of the reckless and irresponsible driver from the highways by requiring that owners and drivers of motor vehicles provide proof of financial responsibility." Jones v. Henry, 542 So.2d 507, 509 (La. 1989). The Louisiana legislature expressly announced our state's public policy regarding liability insurance by stating that liability policies are issued "for the benefit of all injured persons" and that it is the "purpose of all liability policies to give protection and coverage to all insureds." Importantly, this "purpose" of compulsory automobile liability insurance has been defined not to protect the owner/driver against liability, but, rather, to provide compensation to people injured by the operation of insured vehicles.
Louisiana law requires all drivers, while operating a vehicle, to be covered by a policy of liability insurance with minimum limits of:
This coverage is often called "minimum limits, liability only" by insurance agents. A policy covering at least these damages is mandatory.
"COVERAGE" and "LIMITS"
"Coverage" means the scope of the protection provided under an insurance policy. In other words, coverage lists the perils you are insured against, properties covered, locations covered, individuals insured, and limits of payment.
"Limits" are the maximum amounts of money that the insurance company will pay you or someone else under each type of coverage.
In Louisiana, you are generally "covered" by an automobile liability policy if:
Liability coverage pays damages due to bodily injury and property damages to someone else for which you are responsible or "at fault." If you are sued, it also pays for your defense, including your attorneys, experts, and court costs. Someone else's lost wages, medical bills, pain and suffering, disability, and car repairs are some examples of what liability insurance may cover. It does not pay you; it only pays someone else whom you have injured. This coverage is mandatory.
Collision coverage will pay you for damages to your vehicle, regardless of who is at fault, if the damage is caused by a collision with another vehicle, an object, or if the vehicle rolls over. It is subject to a "deductible," generally $500 or less. A deductible is the amount which the damages must exceed before the insurance will begin to pay. This means that you will usually be responsible for up to the first $500 in damages that you claim under the collision coverage. This coverage is not mandatory, though it may be required by the bank financing your vehicle.
This coverage helps pay you for loss or damage to your vehicle and its contents, not caused by a collision or rollover. Things like wind, hail, fire, vandalism, flood, theft, and running over an animal are usually part of this coverage. Like collision coverage, it pays you, regardless of who is at fault, and it is subject to a deductible, as well. This coverage is not mandatory under state law, though it may be required by the bank financing your vehicle.
So-called full coverage can be a very misleading description. In insurance terms, full coverage really only means that you have the combination of liability, collision, and comprehensive coverage. It DOES NOT include medical payments, uninsured/underinsured coverage, towing, or car rental.
UNINSURED/UNDERINSURED MOTORIST COVERAGE
Uninsured motorist coverage will pay you or anyone in your vehicle for bodily injury (and sometimes property) damages when you are injured in a car accident caused by someone else who does not have enough (or any) liability insurance. Your medical expenses, pain and suffering, lost wages, and disability are some examples of what this insurance will pay. This coverage is not mandatory, but it is a very good idea to have it. Insurance companies who issue liability policies are required by law to offer you uninsured motorist coverage in the same amount as the limits of liability insurance that you have purchased. If you decline to purchase uninsured motorist coverage, you must sign a special waiver form acknowledging that you were offered the insurance, and you chose not to accept it. It is generally far less expensive than the liability coverage and well worth the cost if you are in a serious accident or have even modeate medical bills.
MEDICAL PAYMENTS COVERAGE
Medical payments coverage will pay "reasonable and necessary" medical and funeral expenses for you and anyone else injured in your vehicle (up to the purchased limits). It is "no fault" coverage, meaning that it pays, regardless of who is at fault in the accident. This coverage is not mandatory. It is generally very affordable--usually only a few dollars each month.
CAR RENTAL COVERAGE
Rental reimbursement pays you the cost of renting a replacement vehicle while your vehicle is being repaired or replaced. It pays you, regardless of who is at fault. It is usually subject to a daily limit.
THE BOTTOM LINE
You should discuss in detail your insurance needs with an insurance agent before you purchase any policy. And you should do so again when you renew that policy. Don't simply ask for the cheapest thing they sell. With a little discussion, you may find that higher limits, additional coverages, or lower deductibles may not be much more expensive than the minimum required by law. The information provided in this factsheet is general in nature, and you must understand that each insurance company may have a slightly different policy. The terms of that policy explain what each coverage is and does. In the end, your agent will be able to assist you in making the very important decisions about balancing the costs of different insurance coverages against the risks of being in an automobile accident.
The members of SmithBush share the belief that our work is fundamentally the pursuit of social justice. We represent regular people who need help. That has been our mission since our founding in 1911, and though our growth and success has broadened the range of matters in which we are asked to help out, our focus has remained the same: achieving justice for workers, families, consumers, patients, and small business owners. Our offices are available to consult with you about serious personal injuries, insurance claims, wrongful deaths, and felony criminal defense in Louisana and the Gulf South.