Progressive, has an ad which shows Flo reaching for a box right off the shelf implying exactly what you need for auto insurance coverages are included in that box. Contrary to that, most everyone has heard the expression “think outside the box” with the goal of getting people to explore the options. Insurance is not a one size fits all commodity.

I think that advertisement is Progressive’s way of competing with the ad that says “give us 15 minutes, and we’ll save you 15%”. In ten minutes I can “save you” 15% or more, simply by reducing or eliminating some of your coverages.

What prompted me to address this issue was a prospective insured’s irritation at his stupidity for falling for that advertisement.

Like most everyone, this customer felt like he was paying too much for his insurance. It’s so frustrating to pay so much money for something you can never hold in your hand; or feel; or see anything but a written promise to pay when you have a loss (the policy document).  It’s the commodity we all must buy with the hope we’ll never have to use.

This customer had called the 800 line of that advertised insurance company. True to their advertisement, after about 15 minutes of “haggling”, as he called it, the person on the other end of the phone came up with a savings of about $150– very close to 15%. He was proud of his efforts and advised me that he took every opportunity to brag to his buddies how much he had saved. That bragging stopped after he was hit by an under insured driver on Route 6 in Johnston. The other guy was at fault for the accident but did not have enough coverage to pay for all of his injuries or “damages”, thus an under insured driver.

When taking out that policy, to save this individual the $150, they had cut way back on his Uninsured and Under insured motorist coverage, explaining that it wasn’t legally required. True, it is not always required and it is not one of the primary coverages you tend to look for when taking out an auto insurance policy. The representative he talked with told him he had “all the coverages necessary to satisfy the bank holding his auto loan”. What she didn’t explain was that in Rhode Island there is a definite need for uninsured and under insured motorist coverage.

Rhode Island law requires that every registered auto have liability insurance with minimum limits covering up to $25,000 per person injured and $50,000 for all the people injured in an accident that you cause.  It also requires $25,000 for all of the property that you as the driver cause to be damaged. Mandatory insurance was passed into law in 1983. Those are the same limits the legislature put in place 35 years ago. New cars then cost $5,000–$10,000. The $25,000 bodily injury limit might have been sufficient to cover medical costs for 3-5 days in the hospital. Today you can deplete that limit simply while being treated in the Trauma Room of the Hospital ER.

Now, consider that differing studies have concluded despite insurance being mandatory, 18-30% of RI drivers are driving without any insurance.  Additionally, approximately 30% have the minimum limits. That means that almost every other car you see on the road has minimum limits or no insurance at all. When they crash into you, who’s going to pay your medical bills when they exceed what that other guy has insurance for? Who will pay for the injuries of the other people you may have in your car? Who will cover your lost wages when injuries prevent you from working?  You should be compensated for your pain and suffering. Who is going to take care of that?

If the person that hit you has a minimum limit policy, their insurance company should be paying up to their policy limits. However once they pay their policy limits, they are done with the claim. If you have Uninsured/Under Insured coverages on your policy, your insurer will take over. If you do not have these coverages, you are stuck holding that empty coverage box and a whole lot of personal expenses.

When selecting your liability limits, you generally look at how much someone might try to sue you for if you were the negligent (at fault) driver.  You have the most to lose if someone hits you and has no insurance.  Rule of thumb for any professional insurance agent, customers should have the same Uninsured and Under Insured limits as they do for their auto liability limits to protect them when they are involved in an accident with someone who has no insurance, or has inadequate limits. Remember, it is coverage to protect you against all the stupid, reckless, impaired, or aggressive drivers out there.

If you selected your insurance in 15 minutes or less, or got it from a box, you might be surprised to learn that you have coverage voids.  I, and every independent insurance agent meet with our customers to learn what you need and how best to provide it for you. Comparing coverage to coverage, whether you buy from an independent agent, from an 800 number or through the internet, cost differences are usually minimal. Usually the differences are found in comparing what coverages are provided and what the selected limits were. Remember the local insurance agent has a reputation in your community he or she develops by servicing your needs; not the time clock that tells them your 15 minutes are up!