PROTECT YOURSELF AGAINST LIABILITY ARISING FROM AUTO USAGE

There are many ways in which a person can be liable for property damage and personal injuries arising from an auto accident. Of course, the best way to avoid liability is for you and your agents and employees to not be involved in accidents. But since auto accidents over one's lifetime are all but inevitable, liability insurance is a wise investment for most people and businesses.

Liability insurance provides protection for the insured when the insured is sued over an accident. Oklahoma law requires that all drivers on the public highways be covered by liability insurance with minimum coverage of "10-20-10." The first "10" means that the insurance company will be liable for up to $10,000 for injuries to any one person; the "20" means that the insurance company's total liability limit for personal injuries will be $20,000, regardless of how many people are injured; and the second "10" means that the insurance company will be liable for up to $10,000 for property damage done to other vehicles.

However, $10,000 (in the event one person is injured) or $20,000 (if two or more people are injured) is, in cases of any significant injuries, simply inadequate. Medical bills can mount up quickly, even for less-than-life-threatening injuries (for example, an MRI is a common test performed after auto accidents when x-rays don't explain the injury, and an MRI can easily cost $1,000).

Therefore, it is important for drivers and auto owners to have significantly more than the minimum liability coverage, and this is especially true for persons and businesses who have significant assets which an injured person could execute upon once a judgment is obtained. Consider a businessman whose business is worth $100,000 but has only 10-20-10 liability coverage; if he (or someone for whom he is responsible) injuries another severely, his insurer will probably quickly pay the $10,000 policy limits, but the injured person will surely not be satisfied with $10,000 if he believes he is entitled to more and he sees a source from which additional money can be obtained (i.e., execution upon and sale of the businessman's business).

Fortunately, increased liability coverage is not as expensive as the initial liability coverage. In other words, to obtain double the minimum coverage (20-40-20), the premium will not be double the premium for 10-20-10. Although most people seem to think auto insurance rates are too high, most people would be surprised at how relatively inexpensive increased liability coverage is.

While auto liability policies are usually the only source of insurance coverage of an auto accident, they are not always the only source. For example, a business may not own a single automobile (and would therefore not have an auto liability policy), but, as previously discussed, an employer can sometimes be held responsible for an employee's negligence. However, the business can protect itself by making sure that its business owner's policy (which usually covers damage to or loss of the business' property, as well as liability to persons injured on the business' premises) includes "employer's non-owned auto" liability coverage.

The "employer's non-owned auto" coverage is often an optional coverage, but the additional premium is usually relatively small. This coverage will usually protect the business from liability when an employee is required or asked to use the employee's auto on company business, such as when a gift-store owner asks an employee to drive the employee's own car to the post office to pick up the gift store's mail.

To guard against being unable to reasonably compensate someone you have accidentally injured and against having your life savings or the business you've worked a lifetime to build taken from you, review your liability insurance policies, obtain quotes for additional or higher coverage, and decide whether increased protection via increased liability coverage is worth the relatively small increased premium.

This "Legal Update" is provided as a public service of Garvin, Agee, Carlton & Mashburn. It is intended to provide general information about the law, and is not a substitute for the advice of an attorney as to specific facts and circumstances. Anyone having any questions regarding the matter contained in this article, or needing advice as to specific facts or circumstances, should contact an attorney practicing in the appropriate area of the law.

[Back to Articles]