I have been told, many times, by clients that they have “full coverage” for their automobile. What I have learned is that “full coverage” is not often the same as good coverage. There are different types of coverage. I am going to review some of the different types of coverage.
- Collision Coverage – Collision covers damage to your own vehicle, such as hitting another vehicle, a parked car, or an object (such as an item in the road), by collision or upset. When getting collision coverage you need to first consider the deductible amount; raise the deductible and you lower the premium costs. Also, for very old cars, with little value (under $1,000), collision is a waste of money.
However, I had a car with approximately 110,000 miles and a value of under $3,000. I decided to drop the collision coverage, just before a hit and run driver totaled my car. Fortunately, the hit and run driver was arrested by the police, and he had insurance. I was lucky to get the $2,400 insurance reimbursement.
- Comprehensive Coverage – covers damage to your vehicle from anything besides collision or upset. Some common comprehensive situations include water damage, hail damage, theft, or fire damage. You will have a deductible for comprehensive coverage. Consider raising the amount of deductible, or eliminating comprehensive coverage for an old vehicle.
- MedPay (Or PIP in some states) is auto insurance coverage which pays for medical bills incurred as a result of an accident. MedPay covers for people in the insured car, regardless of who causes the accident.
For people without insurance, this can be especially important, to get the necessary medical care after an accident.
In general, I have seen insurance with MedPay amounts of $5,000 to $10,000 per person. In most situations, this is sufficient.
- Property Damage – This covers damage to personal or real property. The most common situation is damage to another person’s vehicle.
Generally, in auto accidents cases, the damage is below $20,000; however it is wise to have at least $50,000 in coverage. I have seen a property damage bill is excess of $100,000 where the damage was to a prototype vehicle, and custom made parts needed to be replaced.
- Bodily Injury – covers other peoples bodily injuries as a result of a driver’s fault (negligence). If you are at fault, the bodily injury coverage does not cover your injuries; rather you can get medical care under your MedPay.
Many people have the state minimum amount of bodily injury coverage. In Connecticut, the state minimum coverage is only $20,000 per injured person, and $40,000 per incident (to cover all person’s injured in an accident. (“20/40” coverage)
Unless you have no assets to protect, you need to get more coverage. “Full coverage” is not 20/40. In my opinion, the minimum amount of protection a driver needs to $100,000 per person, and $300,000 per incident (often it is wiser to have even more coverage).
- Underinsured/Uninsured Motorist Coverage (UIM). For your financial health – you must understand UIM coverage. The situation where you need this coverage can be described as follows
Mr. John T. Klutz is driving his 1998 Chevy Impala, with 258,000 miles on it. John drives through a red light and slams into your car, a 2016 Buick, which just came off the dealer’s lot. You are rushed to the hospital for car. After treatment, your medical bills are $28,000. You have a 14% permanent disability to your back, due to a problem in your back (disc), which was evaluated by a neurosurgeon. In your state, you are entitled to recover your medical bills and money for pain and suffering. Your attorney tells you that he thinks the total value of your case is $85,000.
If John has no insurance , and no assets, you will need to look to your own uninsured motorist coverage for recovery of your personal injury claim.
If John has insurance – a policy with a limit of $20,00 per person, his insurance company will likely pay you the $20,000, and you need to look to your own underinsured motorist coverage for further recovery.
The UIM coverage protects you, if you are in an auto accident, in which someone else is at fault. Get UIM coverage of at least $100,000 per person, and $300,000 per accident, to protect yourself from other peoples negligence. (To fully understand the terms of your policy, you need to talk to a property/casualty agent, preferably one who is not captive, works for only one insurance company).
- RENTAL COVERAGE – covers rental vehicles. This vehicle comes in handy when you are renting a car. Don’t double pay for rental coverage, to a rental agency.
Attorney Robert M. Singer
Law Offices of Robert M. Singer, LLC
2572 Whitney Avenue
Hamden, CT 06518