Part One - INSURANCE
By Steven M. Magas, The Bike Lawyer[1]
Can't you just picture it - maps laid out, clothes folded and ready to be loaded into waiting panniers, bike all tuned up, the smell of Teflon oil floating about the room. The last thing on the touring cyclist's mind as she/he goes through the Pre-Trip Checklist is the "BLS." Unfortunately, failure to consider the BLS can end up costing the touring cyclist time, money and the safety and peace of mind of his/her family! The BLS includes: insurance issues, estate planning and traffic/bicycling laws. We'll take a look at all three, starting with the always exciting topic of INSURANCE today!
INSURANCE ISSUES for the TOURING CYCLIST
Insurance? You don't need to worry about no stinkin' insurance, right? You're driving a BIKE not a car . what can POSSIBLY happen? [For this part of the article, let's assume you are staying inside the United States - things REALLY get crazy in the insurance world when you cross sovereign borders!]
Health Insurance
First, and foremost, before you leave the house make sure you are carrying all of your health insurance information. Keep it close at hand - better yet, pack your insurance card, or a copy, in a small [2"x3"] baggie with your ID, emergency contact information and list of medical allergies and store it visibly on your person - or in your helmet! If you are hurt on the road, unable to communicate and need emergency care or serious medical intervention you do NOT want healthcare professionals wondering who you are, who to contact and whether or not you've got health insurance! "Road ID" is a company that makes an excellent wristband product holding a plate with your emergency information or whatever you tell them to type on the plate!
WARNING: While I have not seen this in my "bicycle law" practice, I have learned from my "motorcycle law" practice that some health insurers are experimenting with limiting the benefits they provide if an insured is injured while riding a motorcycle or engaging in certain other "hazardous sports." As you might expect, motorcycle groups, such as the American Motorcyclist Association, are up in arms and preparing to do battle. However, under policies out there right now a motorcyclist can hit by a DRUNK driver and have NO health insurance coverage! If insurers find this effective, you can BET they will apply the concept to bicycling very soon! A bill is currently pending in Congress to stop this practice.
Homeowner's Insurance
Keeping your homeowner's insurance information with you is also important. Many people do not realize that their homeowner's insurance will provide coverage if they negligently run over someone or something! If you are going on an extended trip, take your agent's phone number and your policy number. If someone claims YOU did something wrong, causing them loss, damage or injury, you will need to contact you homeowner's insurance carrier right away!
Auto Insurance
- Medical Payments Coverage
Why would you need to take information about your automobile insurance policy on a 3 week bike ride? If you are injured in a crash with a motor vehicle you may find some financial assistance buried within your automobile insurance policy!
Most auto insurance policies provide, or offer, "medical payments" coverage. This coverage pays YOUR medical bills if you are in a crash with another car. Historically, if you were hit by a car while riding your bike your "medical payments" coverage could be used to pay some of your medical bills even though the coverage is found in your automobile policy and you were not driving your car when you got hurt.
WARNING: Recently, I came across the first automobile insurance policy I have seen, from Nationwide Insurance, which LIMITS "medical payments" coverage and EXCLUDES paying your medical bills if you are hit by a car while riding your bike! Read your policy closely before you leave. The language may be difficult to decipher, or ambiguous.
You may want to ask your agent if you are covered in such a scenario. If the agent says "Yes," then IMMEDIATELY fax a letter to the agent [and keep a copy] restating your question and his answer and thanking him/her for the advice. State in your letter that you are relying on this important advice because you often ride your bicycle in situations where you are in close proximity to motor vehicles. Even if the agent is wrong, your letter may serve to extend coverage anyway, depending on the case law of your state, as an agent's statements of coverage may bind the carrier.
Auto Insurance
Uninsured/Underinsured Motorist Coverage
One all too common scenario many road riders regularly face is the cowardly motorist who zooms by and runs you off the road, throws something at you or otherwise causes a crash in which the cyclist is injured. These "phantom motorist" cases are tough, but the law of many states provides for a recovery under the "uninsured/underinsured motorist" ["UM/UIM"] provisions of your auto insurance policy.
I advise my clients to buy as much "UM/UIM" coverage as they can afford because it is coverage that pays YOU when you need it the most! The "uninsured" part of this is obvious. If you are struck by motorist who simply has no insurance, your "UM" coverage should pay your injury claim just as if it was the motorist's coverage.
The "underinsured" may not be so obvious. Let's say the motorist who runs you over actually has pretty good coverage - $100,000.00 policy limits. However, because of the severity of your injuries, wage loss, medical bills, pain, permanent injuries and the like, your claim is worth a lot more than that - say, $500,000.00. The motorist, despite his excellent coverage, is considered "underinsured" and your policy's "UIM" coverage may be used to pay more towards your claim depending on your policy limits. Again, the law varies dramatically from state to state on this one!
Are you carrying an Umbrella?
Do you carry any type of excess or umbrella insurance? These types of policies are designed to go over the top of all other policies and only come into play in extraordinary occurrences in which all other available insurance is used up and you still have losses. An umbrella policy is usually written with large policy limits - $500,000.00 or more. You are required to carry certain minimum policy limits for underlying coverage. I advise ALL bike riding clients to consider an umbrella policy. They are typically very inexpensive, provide very high policy limits and, in that once in a lifetime situation, can save your financial life or prevent a bankruptcy! Consult your insurance professional for details.
Real Life Insurance Example
So here's a real-life example of insurance coverage in action. My client suffered a dangerous fractured neck when a motorist backed out of a driveway directly in front of him as he rode down a hill. He needed surgery to fuse his neck. The motorist, unfortunately, had Ohio's pitiful state minimum auto coverage - $12,500.00 [you know. the "keep you legal for less" limits they cheerfully sing about on TV]. The client's medical bills were in excess of $80,000.00. His wage loss exceeded $40,000.00.
Had he not taken steps to protect himself, this cyclist would have been stuck with the $12,500.00 policy limits. Of course, he could have sued the motorist and possibly won a big judgment. However, getting to a "big judgment" takes time and money. The plain truth is that most people who carry the state minimum $12,500.00 policy limits simply don't have the assets to PAY a big judgment. If they did, they would carry more insurance!
Fortunately, my client had purchased excellent auto coverage. This included $300,000.00 in UM/UIM coverage and $10,000.00 in "medical payments" coverage. He used the medical payments coverage to pay his "co-pay" for the surgery and other treatment.
In addition, my client maintained an excellent disability insurance policy through his practice that kept him afloat financially while he was off work completely for more than two months. Finally, my client purchased an umbrella policy with $1.0 million limits. Since his claim had a value in excess of his $300,000 "UM/UIM" limits, we were able to tap into the umbrella to resolve the case.
My client, like most of us, hoped he would never need this range of coverage. However, the "once-in-a-lifetime event" that triggers such coverage happened to him between the end of his workday and dinner one night!
Part TWO - ESTATE PLANNING
Last month I ventured away from safety, accidents and riding the bike to consider the BLS - Boring Legal Stuff - related to insurance and bicycling. This month the second [and last] BLS installment: Estate Planning.
Why does the bicyclist need to worry about "Estate Planning?" What the heck IS "Estate Planning" anyway? Sounds rather vague and morbid! Why should a BICYCLIST worry about Estate Planning for a few minutes instead of cleaning her/his trusted steed?
"Estate Planning" for most of us [us NON-millionaires, that is] consists of getting a will prepared, as well as possibly a trust and, even more important for the bicyclist, a couple of "Powers of Attorney." For most people, their estate planning goals are to provide financially for their surviving spouse, protect their assets, insure that their children are physically and financially cared for, minimize cost, taxes and delay and insure that their plan for the distribution of their life's work is done the way they want it. Other goals may include providing for children of a prior marriage, making sure that business interests are taken care of, providing liquidity to pay bills and taxes and avoiding family conflict and strife!
Here's a little "12-Step" program for getting the BLS done in YOUR life!
1. Make a will.
2. Consider a trust.
3. Make health care directives.
4. Make a financial power of attorney.
5. Protect your children's property.
6. File beneficiary forms.
7. Consider life insurance.
8. Understand estate taxes.
9. Cover funeral expenses.
10. Make final arrangements.
11. Protect your business.
12. Store your documents.
YOUR WILL & TRUST
We all would like to live forever, or at least long into our "golden years." It seems that many adults fear "making a will" more than death or dealing with a life insurance agent! The thought of talking about "end of life" issues scares many people and prevents them from getting their will done. However, the legal effect of NOT dealing with these issues should scare you even more!
Everybody Needs a Will
In a will, you state who you want to inherit your property and name a guardian to care for your young children should something happen to you and the other parent. If you have small children you should have a will - no question about it - you are committing "Parental Malpractice" if you don't! Under Ohio law, if you have no will, then the Probate Court Judge determines who will take care of your children until they are 18 years old. Without a will advising the court about who you want to inherit your property, Ohio law tells you exactly who gets it. Without a will or trust in place, your young children take possession of your entire estate, including all life insurance proceeds and such, at the tender age of 18. Failure to have a will or trust prepared can cause your estate to incur taxes of expenses which could be avoided.
What is a Will?
A Will is a legal document in which you:
· Name the Guardians of your children, as well as alternative Guardians if your first choice is unavailable.
· Describe who you want to inherit your property.
· Name the "Executor" or "Executrix" of your estate - the person responsible for gathering up your assets, paying your debts, and seeing your estate through the Probate process such that your property passes to the appropriate people.
· Provide for passing assets to a Trust.
Not just any writing listing your wishes can be a legal will. Ohio law is very specific about how the will must be signed and witnessed. Failure to follow these rules exactly can cause your wishes to be ignored by the Court.
Trusts: Not Just For Millionaires
A Trust is also a legal document. However, trusts can be extremely diverse in what they do. Today, though, we're going to limit our discussion to a very basic form of trust - one that holds your assets for your children and distributes when they are a little older - say 22 or 25 or 30! During the estate planning process we ask people to look at the life insurance they have purchased, or have available through work, their retirement holdings and all other assets, and determine how much money could be available to their children in the event of their death, or should both spouses die. Often, this ends up being a rather considerable sum of money - more than most people feel like dropping into the laps of their children at age 18!
This is where the Trust comes into play. In your will, you can leave the majority of your estate to a Trust or Trustee, should your spouse be unavailable. In the Trust, you designate when you want your children to have these funds and how you want the Trustee to handle those funds. This distribution can be written in just about any manner that makes sense to you. Want to encourage or pay for college? Your trust can provide for that. Want to give the children a specific sum each year until they reach 25 or 30? Your trust can provide for that. Want to give your Trustee discretion to distribute money to meet each child's specific needs? Your trust can provide for that. In essence, you figure out what works for you and your lawyer can write a Trust to make it work!
POWERS OF ATTORNEY
What are POA's?
A Power of Attorney ["POA"] is a legal document that gives someone ELSE the power to make decisions for you. POA's are of CRITICAL importance to the bicyclist. If you are in a crash and are unconscious or unable to make decisions, a POA gives another person the legal right to make those decisions. The "catch?" A POA must be signed by you BEFORE you are unconscious or incompetent and must contain particular language to be valid after you become incompetent. More importantly, if you do not have health care POA's in place before you are hurt, your family could be in a "Terry Schiavo" situation, where no one has authority to make medical or end-of-life decisions for you.
Financial POA
In Ohio, a "durable" power of attorney is one containing particular language set forth in the Ohio Revised Code such that the POA will continue in force in the event of the incompetency or death of the person signing the POA. "Incompetence" here means that the mental status of the person signing the POA has changed due to illness or medical condition, injury or otherwise, such that the person is incapable of handling his own affairs. For the bicyclist this usually means an accident-caused head injury which renders the rider unconscious, comatose or in an altered state of consciousness.
In a financial POA, the person you choose will have the power to pay your bills or do anything else financially that YOU could do. A POA can be very broad - the power to everything you could do. Most people are more familiar with a very narrow and limited POA- the pink forms at the BMV which permit you to give somebody else the power to get your license plates or sell your car.
The financial POA must be signed when you are competent. If a motorcycle crash renders you unable to make financial decisions, it is too late to create a POA - your assets may be frozen, unavailable to your spouse or family, and your bills might go unpaid or your credit could be damaged.
The Schiavo Case & "Advanced Directives" in Estate Planning
The Terry Schiavo case was a real medical and legal wake-up call for many Americans. The case provided a public window into an Estate Planning "Worst Case Scenario" - a person who was unconscious, but not "terminal," who had never prepared any written instructions advising health care providers as to how she wanted to be treated. Today, so-called "advanced directives," such as a special POA for Health Care and a Living Will, can take care of those issues.
A "Durable Power of Attorney for Health Care" is a legal document that authorizes another person of your choosing to make health care decisions for you if you are unable to make informed decisions on your own.
A "Living Will" is a document that contains your written wishes and instructions for care at the end of life. You can state your preferences regarding aggressive life-prolonging treatment.
Ohio law now specifically provides for "Living Wills" and "Health Care Powers of Attorney". In fact, a simple Google search reveals numerous websites on which forms for both, approved by the Ohio State Bar Association, The Ohio Hospice & Palliative Care Organization and others, can be found. While you can prepare these forms without counsel, you must read them extremely carefully, fill in the blanks appropriately and insure that the witness and notary requirements are followed exactly. Failure to do so can render the forms worthless at a time when you need them the most!
SUMMARY
For most people, these five documents: Will, Trust, POA, Living Will, Health Care POA - make up their "Estate Planning" package. In addition, I would strongly urge bicyclists to use the Estate Planning process as a time to organize your papers and get them in one place, to consider a safe deposit box for important papers, to review and update their life, health and disability insurance and consider any estate tax issues in their situation. Further, this is a great time to discuss your Estate Planning decisions, particularly your end of life decisions, with others. Morbid, perhaps, but for the casual or serious rider, this could be one of your most important conversations!
GOOD LUCK AND GOOD RIDING!
Steve Magas - The Bike Lawyer!
[1] Steve Magas is an avid Ohio cyclist and trial lawyer with Phillips Law Firm, Inc., whose law practice focuses on protecting the rights of riders. Steve has handled more than 150 "bike cases" for cyclists involving crashes caused by cars, busses, trucks, dogs, faulty products and more. Steve's unique "Bike Law" practice has been featured nationally in Lawyer's Weekly USA, and in several local publications. Steve is a co-author of a new book, "Bicycling and the Law," with Olympic cyclist-turned-lawyer, Bob Mionske. Steve was also a contributing author to that epic tome, "Bicycle Accident Reconstruction & Litigation and sits on the Board of the Ohio Bike Federation. You can contact Steve for a FREE CONSULTATION about your legal matter at 513-484-2453 or at BikeLawyer@aol.com. He can be reached Toll Free at 888-883-2600.