Auto Insurance: Do I have Enough?

Can you guess when most people find out that they don’t have enough auto insurance?  You guessed it, after they or one of their loved ones has been injured in a motor vehicle accident!  Although some lessons are best learned the “hard way,” this problem is one that should be avoided at all costs. 

How much insurance and what kind of protection an individual purchases depends on many factors, particularly, how much driving he or she does and what amount of money they feel they’ll need to protect themselves and their loved ones if they’re ever seriously injured in an accident.  Generally speaking, here are a few tips:

1.  Select the “Full-tort” option! 

With “limited-tort,” you lose many legal rights, including the right to recover compensation for the pain and suffering caused by the other driver.  Trust me, don’t listen to anyone who tells you to buy limited-tort!  Full-tort coverage is well worth the slightly higher monthly premium. 

2.  Buy adequate Bodily Injury Liability coverage:

This covers you if you cause injuries to others in an accident.  Another reason you must have adequate bodily injury liability coverage is because your Uninsured Motorist and Underinsured Motorist (UM/UIM) coverage cannot exceed this coverage—and again, trust me, you want good UM-UIM coverage, as you’ll find out below!

3.  Understand how important UM – UIM coverage is:

This protects you and your family from irresponsible drivers who drive without Bodily Injury Liability coverage or from those who purchase minimum Bodily Injury Liability coverage.  For example, what happens if an uninsured driver causes you permanently disabling injuries?  If you have UM insurance, you can make a claim for compensation to your insurance company. If you do not have this coverage, generally speaking, you cannot recover anything from the person who caused your injuries!  Along with Full-tort coverage, this coverage often helps many of my clients protect themselves when catastrophically injured by another driver. 

How much should you buy?  I suggest that you purchase as much as you can afford, but enough to cover at least your yearly gross household income “and then some.”  For most, I suggest at least $250,000.00 per accident.   By the way, did you know that if you elected limited-tort, you may not be able to recover UM or UIM benefits even though you purchased this coverage?

4.  Buy Personal Injury Protection (PIP): 

A.  Medical Benefits:

Under Pennsylvania law, medical coverage under your policy covers the initial medical expenses you or a relative incur after an auto accident.  This coverage is “primary” by law, even if you have private health insurance.  In Pennsylvania, medical coverage is mandatory and every driver must have at least $5,000.00 in coverage.  If you have good private health insurance, purchase $5,000.00 in coverage.  If not, purchase as much as you can afford.  I usually see $10,000.00 of coverage for most individuals.

B.  Lost Wages:

Generally speaking, “Loss of Earnings” coverage under your automobile policy will cover your lost wages after an injury accident.  However, under Pennsylvania law, this coverage is optional and is limited in that it usually pays 80% of gross wages or salary with a maximum limit per month and maximum policy limit.  For example, if you purchase $5,000.00 in coverage with a $1,000.00 per month maximum, the most you will receive is up to $1,000.00 per month for as many months as you are unable to work, not to exceed 5 months.  Therefore, if your take home pay is $5,000.00 per month, you need to buy more coverage.  If you have accumulated a substantial period of sick time at work or if you have a good disability policy, I would only purchase enough loss of earnings coverage to get you through a 3 to 6 month period of time.

C.  Death or Dismemberment Benefits:

The purpose of this coverage is obvious.  This should supplement your funeral benefit and your UM – UIM coverage.  

D.  Funeral Benefits:

Pays a lump-sum death benefit for costs associated with burial.

These “tips” do not apply to every car owner’s situation and are not meant as legal advice for everyone who visits this site.  If you are interested, contact Attorney Chris Marzzacco for a FREE Auto Insurance consultation.  Attorney Marzzacco is also available to your business, church or other small group to provide a FREE seminar entitled  “Auto Insurance:  Am I Really Protected?”