Most people never think about what type of insurance coverage they have until they have an auto accident. Insurance is about protection, you pay your premiums for protection against a number of things. You have many options when purchasing insurance on your car. Those options can differ depending on what state you reside in. One thing all states have is minimum coverage, this is the minimum amount of insurance you can have on your auto. Unfortunately for a lot of people the minimum is not enough, and you usually don’t find that out until you have been involved in an auto accident.
The minimum coverage will vary depending on the state for which you live. Many factors determine what type of insurance people will buy. The main factor is cost. The min coverage does not mean you are covered for all types of loss’s in the event of an auto accident. Carrying the min coverage to remain legal is what a majority of Americans do. We don’t have the stats in front of us, but i would imagine 50% of Americans carry the min coverage. We have listed all the state here with there respective min coverage amounts.
I do not recommend anyone carry the min insurance, because its just not enough in most cases. If you have a severe injury or total a brand new car, your min insurance is not going to be enough to cover those loss’s. If you hit a brand new car and only have 25/50/25 coverage, you could be in trouble. Carrying the min coverage makes you legal, but that does not necessary mean you are safe.
Types of insurance coverage
Many people glance at their declaration page and have no idea of what they are looking at. They don’t know anything about bodily injury, uninsured motorist, under insured motorist, and med pay. Your agent may be good at selling insurance, but he is horrible at explaining what everything means.
If you are found at fault for an auto accident, bodily injury coverage pays for the cost of injuries to the other person or people involved in the auto accident. It also covers a legal defense if you are sued for damages resulting for the car wreck
What Does Bodily Injury Cover?
- Legal fees if you get sued
- Medical cost
- income loss
- Funeral cost
- Pain and suffering
- Medical expenses
25/50/25-What is this?
The first number is 25,000 bodily injury to one person in a vehicle. It is the coverage limit. The insurance company will pay no more than that amount to one person injured in a car wreck you where found to be at fault in. The second number (50) is the total amount the insurance company will pay to all injured parties. It is total bodily injury per accident. In this case its 50,000.00. The problem with this is, if you hit a van full of people and they all are injured, the cost of there medical may be far more than 50,000.00. The last number is Property damage which we will cover next.
Property Damage Liability
This coverage is represented by the last number, 25. This means your insurance company will pay up to 25,000 in damages to cover loss’s or damage to vehicles involved in an auto accident you caused. If You caused damage to one or more vehicles, 25,000 may not be enough.
If you get hit by a driver who has no insurance, uninsured motorist will cover damages. In some instances it would cover your property damage in the event of a hit and run as well. There are 22 states that require you to carry Uninsured Motorist as part of your minimum insurance coverage
- Uninsured Motorist Bodily Injury-Covers medical expenses, lost wages, pain and suffering
- Uninsured Motorist Property Damage-Covers damage to your vehicle up the specified amount
If you are in an auto accident and the other driver was at fault, if he has no insurance or low limits, your underinsured insurance would come to the rescue and pay your medical expenses and property damage
If your car is financed, you may need Gap insurance. Gap insurance pays the difference between what you owe and what your vehicle is worth. If your car is a total loss and you owe 20k on a auto loan, but your car is only worth 15k, you are going to owe the difference if you do not have gap insurance. I have personally seen individuals who did not have gap insurance, owe money on a car that was involved in an accident that was not their fault. If your car is financed, it would be extremely wise to have gap insurance. Gap insurance is sold by most carriers and auto dealers where the auto was financed.
Med Pay or medical payments
This is a big one. I have never had an insurance agent tell me or explain med pay to me. I believe they don’t tell you about because its probably something they dont make money on. Med pay is critical to have in the event of an auto accident. This is what pays for your medical expenses in the event that your injured in car accident no matter who was at fault. It also pays for you and anyone in your car up to the limit. If you have 5000.00 in med pay, it would pay up to 5000.00 for each person. A majority of people, if they have med pay at all, carry small limits. The more you purchase the cheaper it is. Med pay should not be confused with PIP. Med Pay is not mandatory, but highly recommended to add to your coverage if you dont have any. You may have to pay your own medical expenses if you do not carry any med pay.
What does Medical Payments cover
- Funeral expenses
- Necessary medical services
- EMT or ambulance service
- Doctors Visits(Ortho, MD, Nuero)
- Chiropractic treatments
- ER visit
Ask you agent to explain med pay to you and what it means to carry it, if they wont, find a new agent. Medical payments will pay for themselves if you use them one time in your lifetime. Depending on the city for which you reside, you could have an auto accident once every seven years.
We will touch on Comprehensive and Collision a little later, they can become confusing. Make sure you carry enough insurance for your self and passengers in you car. Remember, insurance is about protection, the more you have, the more protection you have. Make sure to ask your agent about med pay, it is very critical to have in the event of an auto accident.