Louisiana law requires you to carry liability insurance coverage on your car. Your insurance company is obligated to provide you defense and indemnity. Providing you a defense means the insurance company hires a lawyer to defend any lawsuit filed against you. Indemnity means the insurance company has to pay a claim or a judgment taken against you. However, the duty to provide indemnity is limited to the policy limits of coverage. For that reason, you should take a close look at the amount of insurance coverage you have considering what assets could be attached after a lawsuit.
I explained this in a conversation with a friend who was a successful banker with lots of real estate. Like many others he told me he had “full coverage.” I asked him to call his agent and ask questions. After a quick call to his agent he learned that he, his wife and one child were driving around with minimum limits coverage of $15,000 and no uninsured motorist coverage.
He became upset when I explained to him that if his son rear-ended a Mercedes coming home from
school, he probably did not have enough insurance coverage to pay for the damage to the car and that he would have to pay for the remainder out of his pocket. What if the other person was seriously injured? That person could end up owning the new apartment complex he just built. My friend became even more upset after a second call to his agent when he learned that for a few dollars more per month he could have insurance coverage that would protect him and his family in case of an accident.
My friend purchased insurance when he finished college and added vehicles to the same policy as he grew a family. His agent never advised him that he should increase his coverage now that he had assets that he needed to protect.
This is not an advertisement for insurance. It is information that the public is generally unaware of. The purpose of insurance is to provide protection. But you can only protect yourself if you educate yourself on what type of insurance you need and what types are available. Be informed. Ask questions.