When It Comes to Auto Coverage, Make Sure You Know Your Stuff

At McCoy & Sparks, we focus on personal injury cases, including automobile, truck and motorcycle collisions. One of the first things we ask our clients when they contact us about a collision case is what kind of auto insurance they have, as well as how much coverage.  We find that most people say they have “full coverage,” but the reality is that means different things in different policies.

TYPES OF COVERAGE

The following are explanations of the most common kinds of coverage. Staying educated and choosing the right coverage for your situation can mean the difference between a small payout from the insurance company or a much larger one if you’re ever injured in an accident.

Bodily Injury Liability—Mandatory coverage that applies if you’re at fault in a collision and someone else is injured. Injury claims are paid out through your insurance company. It also provides for a legal defense if another party in the accident files a lawsuit against you.

Collision—Optional coverage that pays for damage to your vehicle as the result of an accident, regardless of whether you’re at fault or not. Often, you pay some of the cost yourself and your insurance company covers the rest. If the other driver is at-fault and uninsured and you don’t have collision coverage, your property damage is not paid by the insurance company. Even worse, if your car turns out to be totaled and you owe money on the loan or lease, you still have to pay off the loan.

No-Fault and Basic Reparation—These are all different names for essentially the same coverage. Under Kentucky law your insurance company pays your medical bills and lost wages when you‘re in an accident, even if you’re at fault, up to $10,000. Kentucky is one of only 12 states that have no-fault auto insurance laws. This coverage gives peace-of-mind in knowing medical bills will be paid promptly in the event of an accident with injuries.

Basic Reparation Benefits (BRB), commonly called Personal Injury Protection (PIP), includes a standard amount of benefits to be paid in Kentucky. The amount of $10,000 covers medical expenses, work loss, replacement service loss, survivors economic loss and survivors replacement loss. BRB/PIP also covers you if your accident occurs anywhere in the United States, its territories or Canada. Motorcycles can be covered but the benefits have to be purchased for the specific motorcycle.

Property Damage Liability—Mandatory coverage that pays for damages to the car and possessions of the other party in an accident where you’re at fault. It includes labor and parts, as well as the replacement of valuables inside the car that were destroyed—and even stationary objects you may have hit and damaged.

Underinsured Motorist—Optional coverage that protects you if an at-fault driver’s insurance coverage is insufficient to fully compensate you for the damages or personal injury you may have suffered.

Uninsured Motorist—Mandatory coverage that protects you if you are injured in an accident where you’re not at-fault and the at-fault driver does not have car insurance. This coverage can be rejected by you in writing, though that is not recommended.

Umbrella—If you are exposed to a significant loss claim, there is additional coverage that you can purchase for your protection, known as an umbrella policy, which kicks in when your liability limits are exhausted. Many companies require that you have a large liability policy (often $250,000 or greater) before you can purchase an umbrella policy. It also often covers more than auto accidents. Make sure you check with your agent and review the policy to make sure the umbrella policy will cover liability due to an auto accident.

WHAT COVERAGE SHOULD YOU HAVE?

As you can see, there are many options to choose from—some mandatory, others not. Yet any combination of these options is often considered “full coverage” by most drivers. So what coverage should you think about when setting up an auto coverage plan that can truly give you the kind of full coverage protection you expect? Here’s an example—if you can afford more, raising your coverage is always a good idea.

• Bodily Injury Liability - $100,000 per person/$300,00 per accident
• Property Damage Liability - $50,000 per accident
• Collision - $50,000 per accident
• No-fault/PIP/BRB - $30,000 per vehicle on your policy
• Uninsured Motorist - $100,000 per person/$300,000 per accident. Ask for a premium for each vehicle on your policy.
• Underinsured Motorist - $100,000 per person/$300,000 per accident. Ask for a premium for each vehicle on your policy.

WORK WITHIN YOUR BUDGET—BUT DON’T CUT CORNERS

Of course, your family budget will ultimately determine the amount of coverage you can purchase—but don’t let the savings overshadow the risks.