Do You Have The Right Car Insurance Coverage?

“Dean, I have full coverage.” Or, “I only have liability.” These are common statements I receive when speaking with clients who are in automobile accidents. Many of us purchase car insurance without second thought to what we are paying for when we pay that insurance bill. Most people are not fully aware the term “car insurance” actually refers to many different types of protection or coverage that may be offered under an insurance policy. The different coverages under the umbrella of car insurance, address the different kinds of losses or risks we experience each time we drive our vehicles and through car ownership. Below are some of the more common types of car insurance coverage people will purchase:

Liability Coverage. Generally, every car insurance policy will minimally provide what is known as “Bodily Injury Liability” or “Liability” coverage to the policy holder. Liability coverage is mandatory in Illinois and is provided in every car insurance policy that is sold in Illinois. Liability coverage will pay for injury or death to another when the driver is at fault or negligent. In addition to requiring car insurance policies to provide liability coverage, Illinois also requires the liability coverage amount to be a minimum of: $25,000 for the injury or death of one person in an accident. Illinois also requires a minimum liability policy coverage amount of: $50,000 for injury or death of more than one person in an accident.

Uninsured/Underinsured Coverage (UM/UIM). Uninsured motorist coverage is insurance that will pay the injured owner of a vehicle when the accident and resulting injuries are the fault of another driver who does not have insurance coverage on their vehicle or is “uninsured.” With this type of insurance coverage, the injured driver’s insurance company will provide compensation when the at-fault driver does not have any liability coverage. The insurance company essentially acts to provide liability coverage for the uninsured driver. The minimum policy limit amount provided for uninsured motorist coverage is usually the same as the liability coverage amount under the policyholder’s insurance policy.

Underinsured motorist coverage is another type of car insurance coverage that will make payment to the policyholder when they are injured by another driver and that driver does not have enough liability coverage to adequately compensate the injured policyholder. The at-fault driver is essentially “underinsured.” A policyholder can purchase car insurance and include underinsured motorist coverage as part of the car insurance policy. The underinsured policy limits will vary depending upon how much coverage a policyholder wishes to purchase. Of course, as in any type of insurance coverage, the higher the policy coverage amount, the more expensive the premium to purchase that specific type of insurance coverage.

Property Damage Coverage. Property damage insurance coverage will pay for the damage to another’s property; not the policyholder’s property. This car insurance coverage is also mandatory in Illinois and must be in the minimum amount of: $20,000.

Medical Payment Coverage. Medical payment coverage (or “Med Pay”) will pay up to the medical payment policy limit amount for medical bills incurred by the driver/passenger(s) who are in an insured car that is involved in a car accident, regardless who caused the accident. This type of car insurance coverage is like medical insurance coverage for the injured occupants of an insured car, up to the Med Pay policy limits amount. Unlike medical insurance, there is no deductible applied when using Med Pay coverage to pay for medical bills that are the result of a car accident. And, unlike medical insurance, Med Pay will only pay for medical bills that are the result of a car accident, not any other type of medical expense. This insurance coverage is optional.

Property Damage For The Insured. This insurance coverage will pay for damage caused to an insured’s car, even if it is the insured’s fault that caused the damage to the insured’s car. The cost for this type of insurance will depend upon the type of car that is being insured. In other words, the more expensive the car, the higher the insurance premium, as it generally costs more to repair a newer more expensive car than to repair a less costly older vehicle.

Comprehensive Coverage. Also known as “COMP,” this insurance covers your insured vehicle for physical damage or losses resulting from incidents, other than a collision, like theft, vandalism, glass damage like a broken windshield, damage caused from hitting an animal or bird, damage from falling objects and damage caused by severe weather or a natural disaster, like wind storms, hail, hurricane, tornado, etc. Think of Comprehensive insurance as “other than collision” coverage because it generally will pay for incidents that are not the result of the insured vehicle being in an accident.

Towing/Rental Coverage. As the name implies, towing coverage will pay for the cost of towing a policyholder’s vehicle and rental coverage will pay for the cost of a rental car, up to a certain amount, for each day a policyholder’s car is inoperable after an accident, due to the car being repaired or due to a total loss and the policyholder needs time to replace the damaged vehicle.

As you probably know, the cost of the different types of insurance coverage and car insurance, in general, can vary among insurance companies. The cost of car insurance can also vary among states. A recent article appearing in the Personal Finance section of CNBC’s website entitled How much does car insurance cost in your state?, identified the most and least expensive states to purchase car insurance. There are many factors that go into determining the cost of car insurance, as the article notes, from state mandated insurance requirements, to the number of accidents that take place in a particular state. Although it may not be feasible to move to a particular state, solely to save on car insurance premiums, we can shop for car insurance among the many insurance companies and understand the different kinds of coverage available and how much insurance coverage we need. We should buy the type of car insurance that best meets are needs and not everyone’s needs are the same.

So, what type of car insurance coverage do you have? Do you know your policy limits for the various types of car insurance you have? Do you know what insurance coverage you are paying for when you pay your car insurance bill? Do you have more than the state minimum amount of car insurance coverage? Do you need more than the minimum? Next time you sit down with your insurance agent, make sure you understand what you are paying for and what you are buying when purchasing car insurance.

Call an experienced injury attorney to discuss your specific needs so you can be better informed as to the different kinds of car insurance and what best suits your situation, the next time you purchase car insurance. We can help you make informed decisions when buying car insurance. There is a better way.

Together, we can make it better.