Automobile Insurance Policy Coverage
Having auto insurance can help you cover damages following an auto accident. These damages are often significant. In 2012, an estimated 2.3 million people were injured in auto collisions. Another 33,561 people were killed in them. It's estimated that auto collisions cost the country $871 billion each year in economic loss and societal harm. Auto insurance can help drivers pay for damage to others and their property as well as damage to the insured.
Minimum Insurance Requirements
So what kind of coverage is right for you? Before getting to that, you should be aware that virtually every state requires its residents to maintain a minimum amount of car insurance coverage. These requirements are the minimum amount of liability coverage you need in order to legally drive.
How much coverage you should purchase beyond the minimum is your decision. Most authorities recommend that a driver have an auto insurance policy covering more than the legal minimum. Purchasing a more extensive policy will cost more, and for many people that can be a significant expense. However, if the time comes when you need your auto insurance, you may be glad to have purchased a better plan.
Your typical insurance policy will cover damages up to a certain dollar amount. This amount is the liability limit, and is further divided up between different types of damages.
Most insurance policies indicate the liability limit using three numbers. Let’s take the state of New York’s minimum auto insurance coverage requirement as an example: 25/50/10. These three numbers indicate the liability limit for an insurance policy as to (i) one individual’s personal injury damages, (ii) for all personal injury damages for one particular accident, and (iii) for all property damages for one accident.
Here’s an example. Suppose Al is texting while driving and collides into a car containing Bert and Caroline. Both Bert and Caroline suffer serious injuries, and Bert’s car is damages. Al is liable for their damages, but fortunately he has car insurance that meets New York’s minimum coverage requirements. His policy will cover Bert’s injuries up to $25,000 and Caroline’s injuries up to $25,000. It will cover all personal injuries arising from that accident up to $50,000. Finally, Al’s policy will cover damage to Bert’s car and other property up to $25,000 for that accident.
Common Policy Coverage Categories
Insurance policies will cover different types, or categories, of damage up to a liability limit. Here are some common auto insurance policy coverage categories to help you make smart decisions next time you’re shopping for auto insurance.
Bodily Injury Liability
This describes what the insurance company (insurer) will pay when other persons are injured or killed in an accident for which you (the insured) are at fault. This money is intended to cover medical expenses and any damages a deceased person’s family may claim.
Personal Injury Protection (PIP)
With this coverage, the insurer will pay for the insured's injuries and other related damages to the insured and to passengers in the insured’s vehicle.
Property Damage Liability
The insurer will pay damages when the property of other persons has been harmed or destroyed by the insured's vehicle and the insured is at fault. This provision is not always limited to cars. For example, if you ran your car into a mailbox, this provision might cover the cost of replacing the mailbox.
The insurer will pay for damages to the insured's own vehicle, when the insured is at fault. If the insured's vehicle is financed, the loaner may require the insured to maintain collision coverage on the vehicle.
The insurer will pay for damages to the insured's automobile caused by fire, theft, vandalism, riots, and other random destructive acts. If a tree branch falls on your parked car, this provision will pay for repairs to the car. Just like collision coverage, many financers require comprehensive coverage on cars that aren’t paid off yet.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
The insurer will pay for injury or death to the insured and the insured's passengers if caused by another driver who doesn’t have insurance (uninsured), whose insurance company pays too little (underinsured), or whose identity is unknown (as in a hit-and-run motorist). In some states, the insurer will also pay for damage to the insured's vehicle.
Discuss Your Automobile Insurance Policy Coverage Questions with a Lawyer
Dealing with your insurance company or the insurance company of the other driver can be a complicated process. If you're involved in a dispute with an insurer or you just want to get the most out of your policy, it's in you best interest to consult with an experienced car accident attorney near you. An attorney will be able to negotiate with the insurer on your behalf and advise you about the best course of action.
Contact a qualified auto accident attorney to make sure your rights are protected.