Overview of Car Insurance Coverages – Selecting the proper coverages for auto insurance will help protect you and your recent investment in the unfortunate event that something goes wrong on the roads. While no one wants to think something bad will happen to them, a number of recent studies place Maryland driver’s among the country’s worst. And as a former insurance defense attorney for one of the nation’s largest auto insurers, and now as a personal injury attorney with a practicing consisting of a high number of auto crash cases, I’ve seen how not paying attention to insurance issues early on – before a person thinks they need the help – can cause serious issues for them later on.
While reviewing your insurance coverage isn’t going to excite anyone, it’s a good idea to revisit whatever coverages you may already have and upgrade your coverage, if necessary. Of course, if you have any questions, please consult your insurance agent or feel free to call me, if you think I can be of assistance.
Please note that these points are applicable in Maryland, so if you’re driving in another state or purchasing a policy in a different state, these points may not apply. Further, none of this constitutes legal advice, and no attorney-client relationship is created by reading this information. Now that the “fine print” is out of the way…
The law only requires auto insurance (yours or the at-fault driver’s) to cover the actual cash of the vehicle just prior to the crash, if it’s deemed a total loss after a crash. As such, if you owe $20,000 on a vehicle, but the market value was only $15,000, you would be responsible for the difference of $5,000 – even if you weren’t at fault. Purchasing this coverage will make sure that that gap in what is owed versus what is reimbursed is handled by whichever entity you purchase this coverage through.
PERSONAL INJURY PROTECTION (“PIP”)
PIP will cover you for medical billing and/or 85% of your lost earnings or a combination of both, regardless of whether you were or weren’t at-fault for a crash, up to the limits you purchase with your auto carrier. These limits are typically $2,500 or $5,000. Many carriers convince people to waive this coverage altogether, even though it is very inexpensive to add/keep on a policy. Carriers are not allowed to raise your rates for using this “first party” coverage.
LIABILITY-ONLY v. FULL COVERAGE FOR PROPERY DAMAGE
For property damage after a crash, it is important to consider these options. It is cheaper to have liability-only coverage, but it will only cover you if you’re the one who is at-fault, and only for the other driver’s damages. If you select liability only, get in a wreck, and don’t believe you’re at-fault, but the other driver isn’t accepting responsibility for the crash either, neither carrier will repair the vehicle, provide a rental or, if your vehicle is totaled, provide actual cash value for your vehicle for you can purchase a replacement.
LIABILITY COVERAGE FOR PERSONAL INJURIES
If you cause a crash that results in personal injuries to someone else, that person can make a claim against you. You and your assets will be protected only up to the policy limits which you purchase from your carrier. The minimum required in Maryland is $30,000 which, in my opinion, is only sufficient in the most minor of injuries. If a person causes a serious injury to another and has insufficient policy limits to cover the settlement/judgment, they risk exposing any assets they own to attachment after a judgment, if it is in excess of the policy limits protecting them. Other levels of coverage include 50/100, 100/300, and 250/500. These numbers indicate how many thousands in coverage there is. The first number is the “per person” level of coverage. The second number is the “per occurrence” coverage. For instance, if you have 100/300 coverage, you are protected for up to $100,000 per person injured, but capped at $300,000 per occurrence. There are also “single limit” coverages available, where there is one amount to cover the entire incident, regardless of whether you injure one person or a bus-full of people.
UNINSURED/UNDERINSURED MOTORIST (“UM/UIM”) COVERAGE
This coverage comes into play if you are injured by a negligent driver who either has no insurance (UM), flees the scene and is never identified (UM), or has insufficient policy limits to cover your personal injuries (UM) – most commonly medical billing, lost earnings, and pain & suffering. As noted above, the state minimum is $30,000. It is important to consider purchasing enough coverage to protect you, your family, and any other passengers in your vehicle against the possibility you’re struck by a vehicle that is uninsured, flees the scene, or sticks around but is underinsured. Typically, your UM/UIM coverage mirrors your liability coverage in terms of the amount.
STACKING/ENHANCED UIM (“EUIM”)
Typically, UIM works like this: whatever coverage the at-fault driver has in play is deducted from the coverage amounts you have for UIM. So, if a bad driver hits you and they have $30,000 in coverage, but you have $100,000, your carrier could be liable to you for compensation of damages related to the crash up to $70,000 (since the at-fault driver is responsible for the “first” $30,000, per its coverage). If, however, you purchase EUIM, you can then “stack” the total of your UIM policy on top of the one policy of the at-fault driver. As such, in the example above, rather than have an additional $70,000 in protection after the at-fault paid the $30,000 on its coverage, you’d ADD the $100,000 to the at-fault’s policy for $130,000 total in coverage.
PERSONAL LIABILITY UMBRELLA POLICIES (“PLUP”)
If you have considerable assets that you wish to protect, you may want to investigate a PLUP. These are typically written for $1,000,000 and stack on top of the other liability coverage you have per person/per occurrence. As with other coverages, it is best to consult your agent when considering this coverage to determine which is right for you.
IF YOU’RE INVOLVED IN A CRASH
If the unfortunate happens, there are some steps to take right away that may seem like common sense but that may escape us when the adrenaline is running high. Please feel free to contact us to receive a free Bmore Attorney Collision Card to keep in your wallet, purse or glove box as a reminder of what to do following a crash. Once you’ve gotten home after leaving the scene or after obtaining necessary medical treatment, I highly recommend calling an experienced lawyer who specializes in personal injury law to go over your rights and how to proceed from there. There are instances where even your own insurance company is going to be against you (for example, see UM/UIM above), as its ultimate goal is to pay out each and every claim as cheaply as possible. And it’s my job to make sure they pay you what’s fair for what you’ve lost.