Your insurance policy probably contains strange categories, numbers and letters and a variety of papers giving you the chance to waive or increase certain coverages. What does it all mean and what should you do to protect your­self without paying too much?

Although each jurisdiction has its own laws regulating coverages, all mandate ­­bodily in­jury (BI) coverage, usually up to a max­i­mum of $500,000.  This covers others if you are at fault in an accident.  The coverage sometimes allows up to $100,000 coverage per person injured and up to $300,000 total for any one accident.  Most states mandate a minimum amount of coverage in this category, often $20,000 or $25,000.  A person injured in an accident can generally make a claim for medical bills, lost wages, and pain and suffering.  BI coverage pays for these damages.  If someone has damages that are greater than your policy limits, that person might be able to collect the excess directly from you.

There is also prop­erty damage (PD) coverage for the prop­erty of others if you are fault.  Usually, $50,000 is sufficient and insurance companies won’t offer more, although with some luxury cars, there could be more damage than that.  This coverage is not just for another person’s automobile, it can also cover property damage if you drive off a road and hit a fence or a building.

Lately, many people have cut back on their insurance coverage and sometimes the person that is at fault has either no coverage -- which is illegal in most states -- or limited coverage.  Therefore, the insurance companies offer uninsured motorist (UM) coverage which covers you if the other person is at fault and has either no insurance or limited insurance (called under­insurance motorist (UIM) coverage).  These usually can be up to the maximum of your BI coverage, and many people recommend at least $300,000.  Thus, if you are injured by the negligence of another driver, and that driver only has the state’s minimum coverage or has no coverage, your own policy can step in and pay damages to you for up to the greater amount that you have purchased.  For instance, if you are seriously injured by another driver who has $25,000 coverage and you have $300,000 coverage, you can collect the $25,000 from the other driver’s insurance company and up to another $275,000 from your own insurance company.  Because the accident was not your fault, your premiums should stay the same.

Comprehensive covers your vehicle’s damage or theft unrelated to an accident (perhaps a rock breaking the wind­shield) or if the cause of the damage is unknown (perhaps a parking lot scrape when you return to your car) and collision covers accident damage to your ve­hi­cle (if it’s your fault).

Some states have mandatory no fault coverage, Personal Injury Protection (PIP), and an election period following an accident to choose whether to attempt to get money from the other driver or from your own policy.  Most states have PIP cover­age avail­able up to $10,000, but it can be waived.  PIP coverage pays for you and your passengers’ medical bills and lost wages without having to sue the other driver.  Some states have medical payment (Med­Pay) coverage, similar to PIP cover­age, but without lost wages coverage.  These cover your bills (and wages) even if they’re covered by health insurance or you recover from the other side. Because this coverage applies whether you’re at fault or not -- and thus you’re more likely to use it than other coverage -- and because most lawyers don’t take a fee for collecting this money, many people recommend the highest coverage available. 

Kamerow Law Firm PLLC