Examining Your Car Insurance Policy

There’s no shame in being an adult who doesn’t know how car insurance works. Unfortunately, it isn’t something we teach in school. If you aren’t sure how car insurance works, it’s time to do some research to ensure you’re protected when it matters the most.

How It All Works

When you purchase car insurance, you regularly pay a fee in exchange for your insurance. You may pay this monthly, quarterly, semi-annually, or annually. This recurring fee is called your insurance premium. Your premium is based on many factors, including the likelihood of you getting into a car accident. In exchange for this monthly premium, your insurance company will provide certain types of coverage, up to the limit of your policy. The policy limit is the maximum amount the insurance company will pay. So if your policy limit on property damage liability is $50,000, the insurance company will pay up to $50,000 worth of damages you cause to someone else’s property.

Personal Injury Protection

uninsured motorist bodily injury

Personal injury protection is insurance that protects you in the event of injury, regardless of who causes the accident. In some states, drivers are required to carry personal injury protection insurance. These are called “no-fault states.” Other states don’t require drivers to carry personal injury protection insurance, but allow drivers to add it to their insurance policy if they choose. These states are called “add-on states.” Lastly, there are “fault states,” sometimes called “at-fault states.” These states do not require personal injury protection insurance, nor do they allow drivers to purchase it. If, for example, you have a policy with $3,000 worth personal injury protection insurance, that means your insurance company will cover the first $3,000 worth of injury-related expenses. In no-fault states, you cannot file a claim with the liable insurance until you’ve exceeded your personal injury protection policy. If you don’t have personal injury protection, and your state doesn’t require you to have it, you can file a personal injury claim as soon as you’d like.

Property Damage Liability

Property damage liability coverage refers to the amount of coverage your insurance will provide if you cause damage to another person’s property. Let’s say you accidentally rear end the person in front of you because you weren’t paying attention. If you caused $50,000 in property damage liability coverage, your insurance will pay up to that amount. The amount of property damage liability coverage you’re required to carry may vary from state to state. In most cases, property damage only covers the damage that you cause to someone else’s property. Back to the rear-end collision example, the damage to your vehicle may not be covered under property damage liability. If the policy limits aren’t enough, you could be personally liable for the excess. 

If you only have “liability coverage” on your insurance policy, this means that your insurance will only pay to fix the other person’s car, not your own. If you want your car fixed by your insurance as well after you’ve caused a crash, you should ensure you have appropriate coverage. 

Bodily Injury Liability

uninsured motorist bodily injury

Bodily injury liability coverage will usually cover any injuries that you cause to other drivers. Under most policies, bodily injury liability coverage does not cover the policyholder’s injury-related expenses. Much like property damage liability coverage, bodily injury liability coverage only covers up to the policy limit. If the damages exceed the policy limits, the policyholder could be liable for the excess. Each state has its own laws about how much bodily injury liability insurance each party is required to have. In no-fault states, the plaintiff has to use all of their personal injury protection insurance before they can file a claim with the defendant’s insurance. States may also have minimum insurance policy limits you as a driver are required to purchase for bodily injury, meaning if you cause someone else to get hurt while driving your car. For example, Nevada only requires a driver to have $15,000.00 bodily injury limits for drivers. Utah requires that drivers have at least $25,000.00 and Texas requires a minimum of $30,000.00.  These minimum limits are per person. The state may have a different minimum policy for multiple people injured in a crash.

Uninsured Motorists & Underinsured Motorists

Uninsured motorist insurance protects the insured when they sustain injury or property damage due to a driver who doesn’t have insurance. Uninsured motorist insurance generally protects policyholders in the event of a hit-and-run as well. Underinsured motorist insurance protects policyholders from drivers who have insurance, but do not have enough insurance. Remember when we said that insurance will only cover up to the policy limit? Well, if you were injured, and the at-fault party only has $50,000 worth of coverage, your insurance may cover injury-related expenses that exceed that $50,000 policy limit. It’s always a good idea to consider uninsured motorists and underinsured motorists when making decisions about your policy. Both underinsured motorist insurance and uninsured motorist insurance are fairly inexpensive, and they can save you a lot in the long-run.

Comprehensive and Collision

uninsured motorist bodily injury

Comprehensive insurance helps cover your damages in instances that happen outside of a collision. Vandalism, theft, and acts of God, are all covered by comprehensive insurance. If your car is financed, there’s a good chance your lender requires you to have this kind of insurance. Collision insurance helps cover damages that occur in a collision. Collision insurance will usually cover damages you cause to your property. If you accidentally hit a tree, collision insurance may cover your property damage. Much like comprehensive insurance, collision insurance may be required by your lender if your car is financed. 

When You’ve Been Injured

If you’ve been injured by the negligence of another person, and you need help winning fair compensation, contact Moxie Law Group today.