10 reasons you need to understand your auto insurance policy—before it’s too late
Auto insurance isn’t just something you get so you can legally operate a motor vehicle. It’s a contract that protects you when tragedy strikes.
If you hit someone, and you don’t have enough insurance to cover the other driver’s injuries, you risk losing your home, your kids’ college savings, everything you’ve worked for. To keep yourself and your family physically and financially safe, it’s important to have the right coverage in the right amount.
Whether you’re shopping for a new auto insurance policy or just want to understand what you have, call Goodrich & Associates at 412-261-4663 (GOOD) for a free evaluation.
If you’re already dealing with the pain and stress of a collision, call a personal injury lawyer at Goodrich & Associates right away for a free consultation. Goodrich & Associates has the experience to make the insurance company pay.
To help you better understand your auto insurance policy, here are simple explanation to 10 of the most confusing terms.
1. Full coverage
When a negligent driver says they have “full coverage,” it means, well, nothing. Full coverage generally means a driver has the minimum amount of coverage required under Pennsylvania law. That’s $15,000 in liability coverage. If you’re in an accident that requires an emergency room visit, or if you cause and accident and someone is seriously injured, “full coverage” won’t go far.
2. Comprehensive
Comprehensive coverage protects you if anything other than a collision damages your car. This includes theft, vandalism and natural disasters.
3. Damages
If your claim escalates to a lawsuit, your lawyers will argue for “damages.” Damages equate to monetary compensation. If you get injured in an auto accident and the other driver is at fault, he or she may be on the hook for “damages.” Depending on the circumstances, those damages could include your medical bills, lost wages, pain and suffering and disfigurement.
4. First vs. third party benefits
First party usually refers to the policyholder, aka you. Pennsylvania drivers are required to have either combined first party benefits (FPB) coverage or FPB medical coverage.
FPB cover accident-related expenses, regardless of fault. FPB include Personal Injury Protection (PIP) benefits, which includes medical payments and may include income loss, accidental death and funeral expenses (See #7) if purchased. You can buy a combination package that includes all of the above.
Third party refers to a person or company that is not the policyholder or the insurance company. In most instances, the person at fault for an accident is referred to as the third party. If you cause an accident, the other driver can file a claim against your insurance company and collect your third party liability benefits. The driver that ran a red light and hit you is also considered a third party.
Remember, an at-fault driver may only have the mandatory minimum ($15,000) coverage. That means, regardless of your injuries, that’s the most their insurance company will pay you. When this happens, your uninsured/underinsured motorist coverage comes into play (see #8 and #9).
Still confused over first- and third-party limits and claims? Call Goodrich & Associates for a no-risk, free insurance evaluation.
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Call Goodrich & Associates to help answer your questions and for a no-risk, free insurance evaluation.
5. Liability
Liability generally means legal responsibility. Under your insurance policy, you have two types of liability coverage: bodily injury and property damage. Bodily injury liability (aka third party liability) helps pay medical costs, lost wages and other expenses incurred by others involved in an accident where you’re at fault. Property damage liability covers repairs or replacement of another driver’s car.
6. Limited tort vs. full tort
Limited tort means you can sue for economic losses only. It restricts your right to sue for pain and suffering except under special exceptions. If your policy has full tort coverage, you have a right to claim any and all damages, including pain and suffering. Spend the couple extra bucks a month for full tort coverage and protect yourself 100 percent.
7. Personal injury protection (PIP)
In Pennsylvania, automobile drivers are required to have at least $5,000 medical coverage. You can use medical payments coverage no matter who’s at fault. Considering an afternoon in the ER alone can set you back thousands of dollars, you can (and should) purchase more than the minimum medical payments coverage.
Attorney Jack Goodrich recommends that you invest in a good amount of medical and wage/income loss benefits. Most of us don’t have a large enough nest egg to get by without a paycheck. So consider wage loss benefits. Not sure how much? A firm such as Goodrich & Associates can help.
8. Uninsured
If a driver has no auto insurance at all, he is uninsured. If a driver without insurance hits you, you would file a claim under your uninsured (UM) motorist coverage.
In Pennsylvania, the default is to offer UM/UIM limits that match your third party liability limits. However, UM coverage is not required by law. You reject this coverage, but it’s not advisable.
9. Underinsured
If a driver has auto insurance, but it’s not enough to cover your injuries and/or damages, that driver is underinsured. Again, if an underinsured driver hits you, you would file a claim under your uninsured/underinsured motorist coverage. If that driver only has the minimum required by the state, they likely won’t have enough insurance to cover your damages.
Your UM/UIM coverage should match your third party limits; otherwise, you’re protecting others more than you’re protecting yourself!
For a nominal fee, you can also stack UM/UIM coverage. Say you have two cars and each car’s policy has $50,000 in UM/UIM coverage. If you’re in an accident with an uninsured driver, you have $100,000 in UM/UIM to work with. This is an option you must select—it’s not automatic.
Sound confusing? Call Goodrich & Associates with any questions.
10. Worker’s compensation
If you’re driving on the job and get injured in an auto accident, you might be entitled to workers’ compensation benefits from your employer. Workers’ compensation benefits cover medical expenses, some lost wages and other accommodations. It will not pay for your pain and suffering.
Workers’ compensation laws vary by state and the rules get complicated. If you’re injured in an auto accident while driving for work, it’s best to contact a lawyer with workers’ compensation experience.
Goodrich & Associates has extensive experience in both personal injury and workers’ compensation. It handles both types of claims on a contingency fee basis. If they don’t collect, you don’t owe.
Don’t put your life savings at risk because of an inadequate auto insurance policy. Call Goodrich & Associates today for a free evaluation: 412-261-4663 (GOOD).