Don't expect your car insurance to act as life insurance if
you're killed in an auto accident. If your heirs are paid anything,
it won't be nearly as much as they're likely to get from a life
"Dying in an auto accident is only one way to die. You should
always have life insurance," says
, an Atlanta attorney. "I would not plan life insurance coverage
through auto insurance."
Car insurance is meant to take care of your car -- and to help
your family with funeral expenses if you're killed -- but not much
"The purpose of insurance is to financially bring you back to
where you were before the loss," says Tim Dodge, director of
research and media relations at
Independent Insurance Agents and Brokers
of New York.
Whether your survivors see any money at all depends on what
kinds of coverage you have and who was at fault for the
Your own liability coverage would not pay your family after an
accident. If you are killed in an accident another driver causes,
his or her liability insurance would pay your family.
The payout is limited by how much coverage was purchased under
the other driver's
bodily injury liability
policy. In some states, the minimum required coverage -- in some
places as low as $12,500 -- would barely cover the costs of a
Medical expenses count against the total, reducing the potential
While increasing your own liability coverage won't help your
family if you are killed in an accident, the added protection could
keep you from being sued if you cause a fatal accident.
Most drivers with assets to protect should carry coverage of at
least $100,000. "Add-ons" for excess coverage can be bought for not
much more. Katz, for example, says he pays an extra $136 every six
months to increase his liability coverage to $1 million.
"Insurance gets cheaper the more you buy," Katz says. "They're
unlikely to pay out those amounts, so they don't charge much for
Personal injury protection (PIP):
Personal injury protection
is available in no-fault states, paying regardless of who is to
blame for the accident. Penny Gusner, consumer analyst for
CarInsurance.com, says benefits vary widely.
In Michigan, for example, your family can get 85 percent of your
income, up to $5,189 a month, in survivor benefits. The death
benefit under Florida PIP law is only $5,000 -- and until a recent
change in Florida law, survivors saw nothing if medical bills had
already consumed their coverage.
"At least there was this one saving grace for families facing
this type of catastrophe," says Russel Lazega, an attorney in Miami
Accidental death benefit:
Also called accidental death or accidental death indemnity, this
optional coverage pays in a covered auto accident where you or a
family member die from bodily injury causes, Gusner says. Without
this coverage, your family may have to pay out-of-pocket for your
Uninsured and underinsured motorist coverage:
If you're hit and killed by an uninsured driver and you have this
coverage, your estate will have to show that the other side was at
fault to collect from your insurer, says Lazega. Your heirs could
recover your loss of income and future loss of income, he says.
Uninsured motorist coverage is optional in Florida, for example,
although Lazega says getting it is a good idea because about 25
percent of drivers in the state don't have the minimum personal
injury protection coverage required by law.
Underinsured motorist bodily injury provides death coverage if
you're killed by someone with insufficient insurance, but only up
to the liability limit of your policy. (See "What you need to know
about uninsured motorist.")
Go to court:
Your survivors can sue the at-fault driver who killed you in a
If the claim is for more than the insurance coverage amount,
your heirs can go after the driver's assets, says Katz, who also
recommends searching for other insurance policies that the driver
may have, such as being insured by an employer if the accident
happened while driving for work.
"You have to do it the old-fashioned way and either deal with
their adjuster or drag them to court," says Lazega, adding that
about half of the auto death cases he handles go to court.
What survivors can bring a claim for varies by state, says Shane
Fischer, an attorney in Orlando, Fla. A surviving spouse in
Florida, for example, can collect for pain and suffering, lost
support and services, and lost companionship, Fischer says. If
there isn't a surviving spouse, adult children can collect for pain
and suffering, lost parental companionship, instruction, and
Life insurance is cheaper
Any lawsuit is a roll of the dice, and so is depending on the
responsibility of your fellow motorists.
"In the end, if you want to make sure your family is provided
for, buy life insurance. It's cheaper," Gusner says.
For example, a 20-year, $250,000 term policy for a healthy
30-year-old costs about $150 a year, according to LIMRA, an
insurance trade association. (See "How to evaluate term life