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HOW WELL DO YOU KNOW YOUR AUTOMOBILE INSURANCE POLICY?

Do you know your rights?

The terms used by agents and insurance companies in the automobile insurance industry can be confusing. This article is to help you understand what the terms of your insurance policy mean and what you are entitled to under the law.

Minimum Coverage. Pennsylvania has minimum amounts of coverage required by law for each automobile insurance policy. This is the classic 15/30 policy. What these numbers mean is that you have $15,000 in insurance coverage which is available to a person who is injured when involved in an accident with you. If there is more than one person involved, there is $30,000 in coverage. That’s it. This minimal insurance is fine for someone who does not own a home, or does not have a large bank account or other assets to protect. If you have assets, you should have more insurance to protect those assets in the event of an accident. Jointly owned assets (like a home) could not be seized outright in the event of a judgment, but a lien could be placed on the asset, which would have to cleared before the item could be sold. Insurance approaching the value of the asset should be purchased to protect it against a judgment. Most homeowners should have at least a 100/300 policy. These amounts apply to "bodily injury" only and do not apply where there is damage to property as a result of an accident. This is a separate item of coverage.

The minimum insurance policy also has $5,000 per person in medical coverage. This means that when you are involved in an automobile accident, even if the accident was your fault, the insurance company will pay $5,000 worth of medical bills for each person in the car (unless someone is insured under another auto insurance policy). More medical coverage can be purchased, which may be wise for someone with no health insurance. Health insurance may pay for medical bills after the auto coverage has been exhausted. The bills must be submitted to the medical insurance to determine coverage.

Finally, the minimum policy provides $5,000 in property damage coverage. This coverage pays for damage to another vehicle, signs, fences, or any other object which may be damaged in an accident. You can also purchase more of this type of coverage.

Collision coverage is an optional coverage, meaning it is not required by law. However, if your car is leased or you are paying off the loan on the car, this coverage is typically required by the bank. Collision coverage will pay for repairs for damage to your car, regardless of fault, subject to your deductible.

What is a deductible? The deductible is the amount PER ACCIDENT that you will need to pay before the insurance company begins paying for your property damage. The lower the deductible, the more expensive the insurance. However, your deductible should not be more than you can comfortably pay if you get into an accident. Unlike health insurance, the deductible does not accumulate throughout the year and you must pay it each time your car is fixed and the repair is paid for by your own auto insurance.

Limited Tort or Full Tort? When you buy any automobile insurance coverage, you must select your "tort status." Your tort status refers to your ability to recover money for pain and suffering in the event of an accident. With Limited Tort, you must have a severe injury such as a broken bone or disc herniation in your back or neck to recover. Six months of back pain with no positive test result showing a severe injury will not entitle you to recover for pain and suffering under Limited Tort. There are some exceptions to this rule, which you can call me to discuss. To preserve your right to recover money from the person responsible for your injury, no matter how serious, you must select and pay for Full Tort coverage under your policy.

Uninsured and Underinsured Motorist Coverage (UM/UIM). This is an optional coverage that you must either select or waive when you buy insurance. Uninsured Motorist Coverage covers you if you are struck by a driver with no insurance. Underinsured Motorist Coverage covers you if you are struck by a car who does not have enough insurance to fully compensate you for your injuries. For example, if you lost a limb in an accident with a driver who has a $15,000 policy, that money does not fully compensate you for your loss. If you had purchased UIM coverage, you would then be able to make a claim against your own insurance for more money to more fully compensate you for your loss.

What is stacking? Stacking is where the policy limits for more than one vehicle are added together to make more money available to you. Selecting the stacking option will cost more money, but in the event of a serious accident, the amount of money available could make a big difference to the injured person. Medical benefits cannot be stacked. Stacking typically comes into play where there is a severe injury, inadequate insurance, and the injured person has UM/UIM coverage. The UM/UIM limits can be added together if you pay for this coverage. For instance, $50,000 in stacked UM/UIM coverage on 2 cars would be added to make $100,000 available to the injured party.

Other optional coverages include up to $1.1 Million in medical coverage, income loss benefits, accidental death benefits and funeral benefits.

PLEASE NOTE: YOUR REGULAR AUTO INSURANCE DOES NOT COVER YOU WHILE YOU ARE DRIVING A MOTORCYCLE, SCOOTER, QUAD OR OTHER SUCH VEHICLE.