The New Year is here, so we just received in the mail our car insurance renewal notice. Like most people probably do, I just set the policy aside and paid the bill. I know it’s a busy time of the year, but I would encourage you to dig out your car insurance policy from wherever you file it, and, if you don’t have it, have your agent email it to you so that you can do a quick review of your coverages.
As a car accident lawyer who helps people after they have been injured in accidents, I can promise you that the choices that you make when you buy car insurance have a major impact on your legal rights, as well as the financial consequences of an accident, whether you are the person who causes the accident or the person who was injured by it. Consequently, I recommend that you look at the following areas on your policy:
Liability Coverage protects you in the event you make a mistake and cause a car accident which causes property damage or bodily injury. The state minimum coverage is $15,000 per person/$30,000 per accident for bodily injury and $5,000 for property damage. In order to protect your personal assets from legal liability if you cause an accident, I recommend that you have at least $100,000 per person/$300,000 per accident in Bodily Injury Coverage and $50,000 in Property Damage Coverage.
Pennsylvania operates on a no-fault system, so regardless of who is at fault for causing a car accident, your own car insurance will pay for your medical bills up to the amount of your coverage. The great news is that there is no such thing as a deductible or copay. Car insurance will pay your medical bills and gets a steep discount on medical costs, so the medical coverage goes a long way. The state minimum coverage is $5,000, but I recommend that you consider getting $10,000 or more given the fact that most of us nowadays have a high deductible health insurance policy, so it is costly to pay medical bills once car insurance has exhausted.
Full Tort / Limited Tort
When you buy car insurance in Pennsylvania, you have to choose whether you want Full Tort or Limited Tort. Full Tort protects your full legal rights to compensation if you are injured in a car accident that is caused by someone else. Limited Tort limits your rights to compensation. Full Tort costs 10-15% more than Limited Tort, but, since your full legal rights are protected, I strongly recommend that you have it.
Uninsured/Underinsured Coverage protects you in the event that you are injured in an accident caused by someone who either has no insurance or not enough insurance to make up for the injuries and damages that they cause. Uninsured/Underinsured Coverage is optional coverage, so you don’t have to have it, but it’s important to have in order to protect yourself and your family if you are injured by a driver who has no insurance or little insurance. Having Uninsured/Underinsured Coverage allows you to make a claim on your own policy for compensation for bodily injury, things like medical bills, lost wages, and pain and suffering in the event that the other driver has no insurance or not enough insurance to make up for the injuries caused by the accident. I recommend that you have at least $100,000 of Uninsured/ Underinsured Coverage.
Lost Wage, Accidental Death, Funeral, and Burial Coverage
Although no-fault medical coverage is mandatory, Lost Wage Coverage, Funeral, Burial and Accidental Death Coverage is not mandatory. It’s important to consider having Lost Wage Coverage because, like coverage for your medical bills, it pays regardless of who was at fault for causing an accident. Accordingly, if you are injured in a car accident, whether you caused it or not, and you have Lost Wage Coverage, your own car insurance company will pay your lost wages.
Similarly, if you do not have significant life insurance, it is important to consider having Accidental Death, Funeral and Burial Coverage on your car insurance in order to pay compensation to your family if you are killed in an accident. Again, such coverage applies whether the accident was your fault or someone else’s fault.
Miscellaneous Coverage to Consider
There are other coverages that you may want to consider on your car insurance policy. Usually for a small fee, you can purchase Towing Coverage that will pay for towing expenses in the event of an accident or your car breaking down.
If you purchase a new vehicle, it is also important to consider having “Gap” Coverage, which is coverage that will make up the difference between your car loan and the fair market value of your vehicle in the event that your vehicle is totaled in a car accident. Many times in my career, I have seen situations in which a client’s vehicle is totaled in a car accident caused by someone else and the fair market value of their vehicle is less than their remaining loan balance. Under Pennsylvania law, the responsible driver’s insurance company is only required to pay you the fair market value of your vehicle, which oftentimes is less than your remaining loan balance. If you do not have Gap Coverage, you need to pay to make up the difference. However, if you have Gap Coverage, your insurance will make up the difference.
If you have any individual questions or want advice about the adequacy of your car insurance coverages, please do not hesitate to contact me for a free review of your policy.
Also, be aware that you do not need to wait for your policy to expire before making changes in coverage. Instead, you can call your agent at any time to change coverage, and you will get an interim bill for any price differential.
Now, dig out your car insurance policy and start reviewing it, and have a Happy Holiday Season!