17 Apr 2019

Jim and his sweet, insured ride!

By Jim, Our “Senior” Contributor

A major legal obligation we have to our fellow Americans is that we have automobile insurance coverage. Should an accident happen where we are responsible, we’re required to make things right with the damaged party. The fact, however, is that while legally required to have automobile insurance to drive their vehicle, large numbers of individuals in this country shirk their automobile insurance duty and, if we might be the damaged party, they may not be able to make things right with us.

There is the factor of being insured to meet the minimum insurance requirements of your State’s statute to operate your vehicle, and the issue of being adequately insured should an accident happen, regardless of the person at fault. The old adage about insurance is that you never know how much you need it until you need it.

So, what are the nuances of this thing called automobile insurance? What should I know to have the right kind and have adequate insurance? The answers really depend upon many factors that pertain differently to each person or family; however, here are some of the things to be aware of in coverage provisions.

Most states only require liability insurance, which a person purchases to cover the costs of a car accident they caused leading to injury, death, or damage to their vehicle, any property damage, and for legal fees. Even with this liability requirement, the level of state-required insurance is usually low and may not be enough to cover the extent of total liability. You must remember that if costs exceed the amount of liability insurance carried, then you are responsible for the rest. Likewise, if you have only property damage liability and the accident is your fault, the other driver can sue for reimbursement of the medical costs. It is wise to fully discuss the level of liability one should purchase with your insurance professional. Many times, moving to a higher value liability level is not that much more expensive.

An important coverage provision of twelve “no-fault” states is the requirement that drivers have insurance to cover their own injuries and damage rather than insurance to pay out to the other person in an accident. This insurance coverage helps to pay for you and your passengers’ medical bills if you are injured, regardless of who caused the accident.

Other important types of coverage include:

  • Personal Injury Protection (P.I.P.) – this coverage pays for medical expenses (and also lost wages) to you and to your passengers if you are hit by another driver, or if you are a walker or on a bicycle. Also, an important aspect of P.I.P. is the coverage you have if you are injured while you’re a passenger in someone else’s vehicle. In a no-fault state, this is the no-fault part where each injured person makes a claim on their own P.I.P coverage to pay for their medical bills and/or their passenger’s medical bills.
  • Collision insurance covers repairs to your own car after an accident, should the other driver, if at fault, not be able to cover it. In this insurance there is generally a deductible amount (it can vary) that you agree to pay before the insurance company covers the remainder. This insurance is important depending upon the value of your vehicle. If the vehicle has little value, the cost of the insurance and the amount of deductible versus the payback may make this a poor purchase. If you have a valuable vehicle, the payback from collision would be important.
  • Comprehensive insurance covers damage to your vehicle from non-crash accidents. These might be vandalism, acts of nature (hail), theft, hitting an animal, windshield, and fire. As with Collision insurance, the coverage comes in various coverage amount levels and deductible levels. Therefore, the need to carry this coverage and the extent of coverage will depend upon the value of your vehicle.
  • Uninsured and underinsured motorist protection are protections that are required in some states. These coverages pay the costs of car repairs if an uninsured or underinsured driver hits you. This coverage does not have a deductible but there is usually a limitation on the amount you will be able to collect.

It is very important to make sure you have adequate coverage in bodily injury liability and uninsured motorist insurances. Because everyone’s situation varies, it is important to talk with your insurance professional/agent on coverage – the amount, the deductible, the types, and the issues that might be pertinent if an accident happens. While it can be expensive this insurance can protect you from great financial loss and is one of the ethical and legal requirements owed to your fellow American as a member living in a community environment.