Car Insurance: What Do You Need?
Car Insurance: What Every Consumer Should Know About Buying Car Insurance
I don't know about you, but I find car insurance commercials dominated by marching bands, small animals, and birds annoying. They don't give us information about the product and make a lot of strange promises. When we then consider how tedious it is to shop for auto insurance, many of us wind up without enough helpful information and purchase the wrong car insurance coverage.
I have been involved in personal injury litigation, as a mediator or lawyer, for over twenty years. During that time, I've seen many policies that lead to serious problems for both people who are injured and those who cause an accident. Those problems result from making an uniformed decision in answering two questions. What company will you select? What coverage do you need?
When selecting an insurance company, think about the ways you make other decisions as a consumer. For example, how do you decide on a car manufacturer? A dealer? What factors do you consider when selecting features for a new washer and dryer? Do you shop at one store or compare products, features, and vendors? How does your decision-making process translate to purchasing insurance?
To understand the features of any auto insurance policy, review the Declarations Sheet. That page describes how much coverage you have purchased for different situations. This page details the maximum amount of money the insurance company will pay if you cause an accident or if you are in an accident. With each coverage category, the insurance policy will have a ceiling on how much they will pay or a policy limit. And here's where you need to be especially careful! Often, the biggest cost is buying the insurance in the first place. Therefore, adding coverage and limits may not increase the cost substantially and can provide essential benefits. I'm limiting this article to insurance for injuries. I am not addressing property damage such as collision, rental car coverage, and property damage.
Bodily Injury/Liability.
Since January 1, 2022, all Virginia car owners must have $30,000.00 of coverage per person and $60,000.00 per accident to cover injuries to another person when that vehicle's driver causes an accident. (Without insurance, the owner pays a fee to the DMV to avoid criminal penalties, but they have no insurance.) These limits are the maximum amount your insurance company might pay when you cause an accident. Many people elect more than minimum limits to both protect their assets and to minimize the potential of being named in a lawsuit. A visit to an emergency room after a relatively minor accident can result in bills over $10,000.00. Higher limits may be available without a substantial premium increase. Consumers need to make an educated decision as to how much insurance is necessary to provide them with a sense of security.
Medical Payments Coverage or PIP, Personal Injury Protection.
The law does not require medical payments coverage which pays for any medical bills related to the accident. If you have health insurance, "Med Pay" can cover your co-pays or costs for treatment that your health insurance doesn't cover. It can be difficult to rely on coverage from the person causing the accident since it often takes years to resolve claims. Med Pay can help cover medical bills until the matter is settled. Most policies that I see in my work have $1000-$5000 as their medical payments coverage limit to cover out-of-pocket expenses.
Underinsured and Uninsured.
If you are in a wreck and the other person doesn't have insurance or has insufficient insurance, this coverage provides you with a way to recover your lost wages, medical bills, and pain and suffering. Without this insurance, if you are injured by a person who has no insurance or the minimum limits, and you miss a lot of work, incur a lot of co-pays or uncovered medical bills, or have a long-term condition that impacts your ability to enjoy life, you may be unable to recover anything to compensate you for these losses. Many policies I see have similar limits for underinsured coverage as for liability coverage.
The bottom line? Figure out what you are purchasing when you buy insurance. Understand the difference between bare-bones liability coverage and the benefits of obtaining underinsured and medical payments coverage. If you have questions, talk to several insurance agents and have them answered. Hopefully, you won't need the coverage, but if you do—you'll appreciate that you took the time to be an informed consumer.
When you have questions about insurance, talk to your agent and be sure to understand the cost and benefit of what you are purchasing. Contact us if you have any other questions!