Auto insurance is important to everyone who has a vehicle. Not only do all states require at least a minimum level of auto insurance protection, but individuals also have a consideration for protecting personal assets as well.
All insurance policies have limits, and sustained injuries from an auto accident can result in a legal obligation for ongoing medical treatment when auto accident victims are seriously injured.
The problem with is that there are several auto insurance coverage types and each covers a specific element. The concept of "full" coverage can be different for each driver, often based on the value of their vehicle and potential financing issues.
Many lending agencies require a specific amount of insurance coverage along with protection for any potential outcome of an accident. For the typical driver, the varying types of auto protection can be confusing and understanding what they are and how they work is important.
1. Liability Insurance -
Covers damages to another person if you are at fault
Liability insurance is the first obvious requirement when it comes to auto insurance. While all states require some level of insurance coverage, those requirements are almost always insufficient based on the cost of medical treatment in the current U.S. economy.
Not every driver has personal health insurance to help cover their medical expenses, meaning that an "at fault" driver could be liable to provide those funds. They can also be subject to a lawsuit when the amount of liability coverage does not meet the total medical expenses and non-economic damages for pain-and-suffering based on the severity of the accident injuries.Side Note: It is important for any individual with significant wealth to carry enough liability coverage to protect their personal wealth.
2. Collision Insurance -
You won't be fincancially resposible for the entirety of your car damage
Drivers who are found at fault for an auto accident and do not have collision insurance often lose their vehicle due to a lack of insurance coverage and need replacement transportation. Protecting against this situation is the purpose of collision insurance. While it is a nice added protection for those who do not have their vehicle financed, each driver should assess their need for collision insurance.
3. Comprehensive Insurance -
Protection from a single car incident
Sometimes accidents happen that only involve one vehicle and damage may be done without legal recourse for the vehicle owner. Comprehensive insurance is designed to provide this type of protection and can cover a wide range of damage, including vehicle theft.
It is important to note that this coverage can be an expensive addition to a personal auto policy. Luckily, the price can be significantly reduced when the vehicle has an anti-theft device and GPS tracking capability installed.
4. Personal Injury Protection Insurance -
Protection if an injury occurs
Personal injury protection, usually referred to as PIP or "medical" coverage, is also an added protection that can be applied when an at fault driver is injured in a crash and does not have health insurance.
This is required coverage in states like Florida that use "no fault" insurance law.
This type of insurance system requires the injured driver's personal insurance company to cover their injuries first and is designed for quicker medical coverage than is available in "fault" states. Remember that PIP is generally offered in $10,000 increments and additional coverage is available.
It is important for each driver to assess the level of protection they need and adjust accordingly with their own insurance company. It also means that in cases when the insurance company denies a claim the injured driver is at odds with their own insurance company. This also means having an auto accident attorney handling the case is always a good decision, especially when the driver is seriously injured.
5. Uninsured Motorist Insurance -
Protection if you are involved in an accident with an unisured driver
Just because state governments require insurance coverage for all vehicle owners does not mean all drivers on the road are insured. Also, when injury damage amounts exceed the amount of PIP, at fault drivers can still be sued according to the stipulations of the state statute. Uninsured motorist protection is designed to protect against this problem.
The court system will usually make the final decision in a no-fault insurance state when this coverage applies and the liable party can still be pursued for additional damages in the event of a catastrophic injury. These types of accident cases can also be complicated and having an experienced car accident attorney is vital for a full evaluation and legal application.
6. Gap Insurance -
Covers the difference in the value of the vehicle and money owed on the vehicle
Sometimes accidents occur and there are insufficient funds available for full financial recovery. This is called gap insurance protection and is usually applicable when a vehicle is a total loss and the outstanding debt on the vehicle is more than the collision coverage pays. This is protection that should be evaluated by a vehicle owner and their lender, often required for very expensive vehicles, and is not applicable in all situations.
7. No Fault Insurance -
Insurer will pay some or all of your medical bills
Some states do not require no-fault coverage for vehicles owners, but drivers still have the option to add this type of coverage to their policy. It is important to note that it can work differently than from states like Florida with a no fault policy requirement. This should be evaluated individually by the driver as a policy rider, but there is rarely an accident situation when a driver has too much insurance.
To learn more about car accidents, read our A Comprehensive Guide for Car Accident Victims.
Need Legal Advice?