Rightly or wrongly, my perception is that the salesperson is motivated by a high commission and will say just about anything to convince me to shell out the extra dollars. I don’t trust the sales pitch.
Some of those warranty and insurance products may make a lot of sense, and be worth the extra money, but my irritation blinds me to that possibility.
The majority of the cost of getting a motor vehicle license plate or an updated license plate sticker is liability insurance. Every vehicle owner in British Columbia must have a minimum of $200,000 liability insurance. The insurance company will sell you liability insurance to protect you from claims as high as $5 million.
When the opportunity to purchase additional liability insurance has been presented to you, you may have been blinded, like me, to the possibility that it may be a really good idea.
To some, this column may sound like an advertisement because I am going to try to convince you to shell out extra dollars to increase your liability insurance protection. But understand, I am about as far from being an insurance company representative as it gets.
I gain nothing from giving you the advice I am about to give, even if a flood of vehicle owners increase their liability insurance coverage after reading this column.
First, what is liability insurance?
It protects you from injury claims that arise when you are at fault in a crash.
Provided you have purchased sufficient liability insurance, the insurance company will defend and pay out the claim on your behalf. If the amount of the claim is higher than your liability insurance, though, you have to pay the difference.
It is that scary possibility that leads me to recommend you purchase the excess insurance. How much liability insurance should you purchase? All crash injuries cause pain and will have some impact on a victim’s life.
That is one portion of an injured person’s losses, and is commonly referred to as “pain and suffering.”
But severe, and long lasting injuries may last, and our legal system limits compensation for pain and suffering to less than $400,000. That includes injuries that leave a victim in a wheelchair unable to feed himself or herself. Taking the jump from the $200,000 minimum to $1 million is a no-brainer, in my view.But why would you go higher than that? The thing is, a person with such severe injuries will also suffer a loss of income.
Take a 30-year-old tradesperson and the income loss portion of his or her claim, alone, will be well over $1 million. Then there is the expense the injured victim will incur for care. How long do you think it would take for the cost of private nursing care to reach another $1 million?
Some may have heard that a jury in Vancouver recently awarded an injured person $12 million. Thankfully, such serious injuries are few and far between. But they do happen.
Houses don’t burn down very often, either, but we don’t think twice about purchasing sufficient fire insurance to cover 100 per cent of the expense of rebuilding. Why don’t we have that same attitude when we purchase liability insurance?
Liability insurance is there to protect the assets you have worked so hard to build up over your lifetime.
You could lose your house if you have insufficient liability insurance, even if you have maximum fire insurance.
In our legal system, drivers are responsible to reasonably compensate those who are injured as a result of their negligence. By purchasing sufficient liability insurance, you pass that responsibility completely to the insurance company.
The very best protection, however, is taking reasonable care when you drive. Leave your cell phone in the trunk, make sure you pull over if you feel tired and be mindful of the fact aggressive driving or inattention could seriously hurt another human being.
Even if you are a perfect driver, you are financially responsible as vehicle owner for anyone else who drives your vehicle. Go out today and increase the liability insurance coverage on your vehicle.
Published November 1, 2009 in the Kelowna Capital News