Do I Have The Correct Insurance Coverage For My Vehicle?
We're back with the 3rd installment of our “Auto Accident Survival Guide” series. If you haven't read the first two posts in our Auto Accident Survival Guide, check them out here now. In a continuation of what we talked about in the last post, we will be discussing more about insurance coverage. More specifically, we will cover the different types of coverage that can assist you if you're in an auto accident.
As you know, these posts are not a substitute for speaking directly with an attorney and do not create an attorney/client relationship between us. You should not rely on this post, or any of the others on the blog, for legal advice in handling a personal injury claim on your own. Each accident has its own unique set of circumstances and it would be improper to give out legal advice via blog without knowing the specific circumstances of your case. There is no substitute for speaking directly with an attorney about your specific situation. I recommend you contact us if you would like to discuss your case with an attorney.
Liability coverage is the minimum insurance requirement in Texas. This coverage compensates someone when you are at fault for an accident. The minimum amount of coverage required in Texas is $30,000 per person/$60,000 per accident. This means that your insurance company will pay no more than $30,000 to any one person and no more than $60,000 for any one accident (regardless of how many people make claims) for an accident that is your fault.
Liability coverage covers your family members or people driving the vehicle with your permission. Liability coverage also pays for defense attorney's fees if you are sued as a result of an accident you caused. Liability won't cover if you have a Named Driver policy and the person driving your vehicle was not named on the policy, or, if an Excluded Driver was driving your vehicle and caused the accident. See below for more info on Named and Excluded Drivers.
Uninsured/Underinsured (UM/UIM) Motorist Coverage*
UM/UIM covers you if you are hit by someone who is uninsured (doesn't have insurance) or underinsured (doesn't have enough insurance to cover your damages). This coverage steps into the shoes of the at fault driver's liability coverage and fills the gap that is left because they had no (or not enough) insurance.
UM/UIM coverage bodily injury and property damage claims. Bodily injury compensates you for medical bills, pain & suffering, disfigurement or disability. Property damage covers you for the damage to your vehicle. UM/UIM property damage has a $250 deductible. This means that you must pay the first $250 of the property damage before your UM/UIM coverage pays.
Personal Injury Protection (PIP)*
PIP coverage pays for medical expenses and 80% of lost wages as the result of injuries sustained in a car accident. This coverage can be utilized whether or not you were at fault for the accident. PIP Coverage does not cover property damage expenses.
*Something to note about UM/UIM and PIP Coverage is that insurance companies must offer this coverage to you and you must reject it in writing. If your insurance company cannot produce your signed rejection of this coverage they may be entitled to provide it to you.
MedPay is similar to PIP coverage in that it is a no-fault coverage; you can make a MedPay claim on your policy regardless of who is at fault. However, insurance companies can subrogate for MedPay payments. This means that if your insurance pays on a MedPay claim, and you recover from the at-fault driver's insurance, your insurance company is entitled to reimbursement for payments made on your behalf. Unlike PIP, MedPay does not cover lost wages.
Comprehensive & Collision Coverage
Lenders will require you to carry comprehensive and collision coverage if you still owe money on your vehicle.
Comprehensive coverage is sometimes referred to as “anything other than collision”. It comes with a deductible and you must pay that amount before your coverage pays. Comprehensive coverage pays for damage to your vehicle as a result of fire, hail, theft, vandalism, or an event other than a collision.
Collision coverage repairs your vehicle after an accident. The amount paid is either the total cost of repairs, or, if the cost to repair the vehicle is more than the actual cash value of the vehicle, you will be paid the cash value.
Just like it sounds – rental coverage pays for the cost of a rental car if your vehicle is stolen or being repaired. There is usually a limit to how much your insurance company will cover (Ex: $30/day for 30 days). This coverage can come in handy if you were involved in an accident and the other driver's insurance is disputing liability (in which case they won't pay for your rental). Rental coverage saves many people from being without transportation during the investigation period before liability is accepted by the at-fault driver's insurance.
Guaranteed Auto Protection (GAP) Insurance
GAP insurance covers your vehicle when you owe more than it is worth, or when you're ‘upside down'. If your vehicle is damaged in an accident and the total loss value of your car is less than what you owe on your car, GAP insurance coverage can step in to make up the difference.
If you do not have GAP insurance coverage and there is a deficit between what you owe and what your car is worth – you will be liable to pay that difference to your lender. The at fault driver's coverage does not step in and pay this difference. Many people do not realize this until they are in an accident and have to pay the difference between the value of the vehicle and what they owe. GAP insurance does not add much to your monthly premium and can be extremely valuable if you're driving a financed vehicle.
Named and Excluded Driver Policies
Something else to note about insurance policies is that, even if you have these types of coverage, they may not apply if you have a Named Driver or Excluded Driver policy. Named driver policies only cover household residents that are specifically named on your policy. Excluded driver policies exclude coverage for people specifically named on your policy. It is wise to ask your insurance agent or broker if you have one of these policies and who the named or excluded drivers are.
In summary, the takeaway from this post should be that, it's better to have it and not need it than need it and not have it. Most people reject UM/UIM or PIP Coverage only to be left without recourse if hit by an uninsured driver. The same is true for Rental or GAP coverage. These types of coverage can save you hundreds, even thousands, of dollars and a priceless amount of sanity for a relatively low monthly expense.
If you have any questions about what coverage you have you should ask your insurance agent. If you or someone you know has been involved in an accident contact us immediately and we'd be happy to provide you with a free case evaluation.