Insurance... The Bottom Line

Insurance... Can't find much to like about it, but you've gotta have it. I've been representing people who have been involved in accidents ("personal injury work") for a long time now and I have learned very few people (including some insurance agents and attorneys) understand what they need or even what they've got.

Here's the bottom line: you need enough insurance to protect what you've got to lose.

I've had on many occasions the very unpleasant task of sitting across from a client and telling them that the person who injured them didn't have enough to cover their losses or that they don't have enough coverage to handle the claim being made against them.

The most common answer to "what coverage do you have?" is "I'm OK, I've got full coverage". However that's just a general description:. It's like someone telling you "I've got a motorcycle"...but you still don't know if it's a Harley, a Honda, a sportbike, dirtbike, etc.
Full coverage just means you have most, if not all, of the major coverage categories offered to you. Everything depends on the details.

You need: Liability: Enough so that the person you injure in an accident takes your insurance money and doesn't come after you. If you are "judgment proof", for example have no regular job, no career, no assets, then you may be able to get away with the Kentucky required minimum of $25,000 per person, $50,000 per accident. Even then, you're betting that bankruptcy will save you from a judgment that could follow you for 15 years or more.
If you don't fit that category, then raise your limits to what you feel keeps you safe from a judgment that could attach your house, your vehicles and your paycheck. I usually recommend 100/300 (that means $100,000 per person and $300,000 total per accident)as about the least a person of average means should have. You'll be surprised just how little that raises your premium over the minimum. If you have more to protect, get your limits up higher and consider a personal umbrella policy to raise it to one million. That is a policy that starts where all of your others leave off and usually costs somewhere around $250 to $600 per year, depending on your record and your company.

Property damage: That's the amount that covers the vehicle or other personal property you damage. The state required minimum in Kentucky is $10,000 and it doesn't take much looking around the average parking lot to see that most of the vehicles, two and four wheeled, would cost more than that to replace. With the higher liability limits above, the property damage limits will be higher.
Again, the idea is to have enough insurance so that the person harmed does not have to come after your personal assets to be made whole.

Collision: That's the coverage that lets your company pay for fixing your bike or car. It can apply regardless of whether you or the other person is at fault.

Uninsured Motorist: This one usually gets an argument. Why, people say, should I have to buy coverage to cover what somebody else doesn't have?: Aren't they supposed to be insured? Yes, but the simple fact is that a lot of them aren't. If you're on your bike and an uninsured car wipes you out, you're SOL (that's Sure Out of Luck for the politically correct among us). If you don't have PIP coverage of your own and uninsured coverage, your medical bills, lost wages and pain & suffering are going to be uncompensated.

Underinsured Motorist: This means that if the guy who injures you has less coverage than it takes to compensate you for your damages, your own company steps up and covers you for the difference, up to the limits you've purchased if necessary. It does not cover property damage to your vehicle.

For both Un and Under-insured coverage, you should buy as much as you feel comfortable with. As a rule of thumb, for under-insured, count on the other guy having no more than $25,000 and for Un-insured, of course, figure on him having nothing.

Personal Injury Protection (also known as "No-Fault" or "Basic Reparation Benefits") This subject is of vital importance to motorcyclists in Kentucky because of a peculiar quirk in the Kentucky Motor Vehicle Reparations Act, KRS 304.39 et seq. as it applies to bikes. The subject can't be covered completely in the space allotted here but remember this, you must either purchase Personal Injury Protection (not "pedestrian injury protection"...that's something different) coverage as a separate line item on your policy with a separate premium or you must complete the form to reject it for motorcycles only. If you don't do one or the other, you can have a $10,000 setoff in what you can recover from the person who injures you in an accident on your bike.

The above is not intended to be a comprehensive treatment of a very complicated subject. There are many large volumes of lawbooks dedicated to insurance coverage and its many confusing subtexts. It is only a brief overview, designed to get you thinking about a topic you don't want to have to think about, but must.

All of these recommendations will raise your premium, but probably not as much as you think. Remember that the purpose of insurance is to protect you, not to be as cheap as possible. (You can buy the cheapest tire on the market for your bike, but when your life depends on a contact patch of rubber not much bigger than two quarters touching the pavement, saving the most money might not be such a good idea.) Like any protection equipment, it bites somewhat to pay for it while hoping you never use it. But when you do have to use it, you really don't want it to be almost good enough.