By: Catherine Nguyen Reeves, Esq.
Buying car insurance can be a daunting task for those who are unaware of the implication of their choices. It’s extremely easy to go online, remember the names of the numerous car insurance companies by their catchy jingles, and instantly compare quotes. Naturally, most people purchase car insurance from the company offering the lowest premium for “full coverage” then proceed with their day, hoping that they will never have to use that insurance.
However, what an insurance company may tell you is “full coverage” could leave you severely underprotected in the unfortunate event that you are injured in an accident. It is important to understand what types of car insurance coverage are available, so that you can make sure you and your family are fully protected.
At the minimum, Pennsylvania law requires “15/30” for liability, $5,000 in property damage coverage, and $5,000 in PIP coverage. If the insured chooses to change from “full tort” to “limited tort”, he can save a few dollars – sometimes a few thousand dollars. The premium for the bare minimum can cost just a couple hundred dollars depending on the insured’s driving history, age, location, type of vehicle, etc. For some, the couple hundred dollars is a costly enough expense to justify paying for the bare minimum for auto insurance without any consideration for the other types of coverage – comprehensive, collision, and UM / UIM for example.
Read on to find out more about the different types of coverage that insurance companies typically offer and whether you should consider having it.
Required in the state of Pennsylvania.
When a driver causes an accident, the injured party may have a claim against that driver. The number reflected by liability coverage will reflect the amount that the insurer will use to protect you and your assets in case you cause a collision.
The minimum required amount of liability coverage in Pennsylvania is $15,000/$30,000 (often noted in shorthand as 15/30 on your insurance Declarations Page). This means that if you injure somebody in a car accident, your insurance company will pay a maximum of $15,000 to one person and $30,000 for the entire accident. If the injured party chooses, he can go after you and your assets (your home, your car, and your wages for example) for any excess amount.
Insurance companies typically recommend that you choose an amount based upon your income, investments, and personal property. A college student living in a shack can probably get away with having only the minimum, but an A-list movie star who drives a Ferrari should insure himself with a higher limit, perhaps $1,000,000/$3,000,000.
Required in the state of Pennsylvania.
First party benefits, also known as personal injury protection (PIP) or medical benefits, will pay for your medical bills if you are involved in an accident. Not all states require this type of coverage.
In Pennsylvania, insurance companies must provide you with a minimum of $5,000 in PIP. After an accident, you might require an ambulance and emergency room treatment. With PIP, your insurance company will cover the cost of these treatments and any subsequent treatments you need without you paying any kind of copay or deductible. PIP coverage can include wage loss, funeral benefits, and accidental death benefits among other things.
This type of coverage is especially important for those without any private or government health insurance. We recommend that you choose a higher PIP coverage if you do not have health insurance. Often, our injured clients who run out of PIP benefits are left with no way of paying their medical bills and choose to stop treating rather than have many outstanding balances to their names. This is detrimental to both their health and their personal injury claim.
An important fact to keep in mind with PIP coverage is that it is no-fault in Pennsylvania. This means that no matter what kind of accident you are in, as long as it involves a motor vehicle accident, your insurance company will pay for those medical bills. If you drive into a tree with no other car involved, your insurance will pay PIP. If you run a red light and hit another driver, your insurance will pay PIP. Even if you are a passenger in a friend’s vehicle and are hit by a truck, your insurance will pay PIP.
Not required in the state of Pennsylvania.
This is optional insurance coverage that will pay for damages done to your car in those scenarios unrelated to a collision. This includes hailstorms, fire, theft, falling trees, etc. You must pay the contracted deductible amount, and your insurance company will pay the rest.
Not required in the state of Pennsylvania.
With this optional coverage, your insurance company pays for the damage or cost of your vehicle in the event of a collision after you pay the contracted deductible. Collision coverage is important for those with newer cars or higher value cars. Whether or not you should get collision coverage depends on the cost of insuring your car vs. the value of your car. For instance, if you own a 1997 Dodge Stratus in so-so condition, the approximate retail value of the car is $1,200 according to the Kelley Blue Book. If you are an excellent driver with no history of citations or accidents, and have many years of driving experience, the premium for collision coverage with a $500 deductible is approximately $40. If you drive for about a year before needing to use collision coverage, you have spent close to $600 already to receive the benefits of this coverage. On the flip side, if you own a newer Audi A4, the insurance companies will probably recommend that you purchase collision coverage. This would be the better alternative than paying roughly $30,000 for a new Audi.
In Pennsylvania, the driver-at-fault must pay for the cost of fixing or replacing the property he damaged in an accident. Unfortunately, this doesn’t always happen in a timely fashion due to investigations into liability or coverage, which could take weeks or even months. These circumstances often leave our clients without a vehicle and no means of transportation. With collision coverage, our clients can have their vehicle repaired or replaced and back on the road sooner.
UNDERINSURED / UNINSURED MOTORIST COVERAGE:
Not required in the state of Pennsylvania, but we highly recommend that you purchase this type of coverage.
This type of coverage is automatically a part of an initial insurance policy until an insured signs waivers to drop or reduce this type of coverage. The importance of UM / UIM coverage is best illustrated through a story:
A young man gets into his car and drives home at night after a long day of work. He is hit head-on by a vehicle driven by a drunk driver. The young man suffers from a concussion, a broken leg, and loss of vision in one eye. He begins to experience migraines and memory loss, requires multiple surgeries, and requires three months off from work to recover. The drunk driver has the bare minimum on his policy, so the young man can only recover $15,000.00 for his injuries. He has no uninsured motorist coverage. The $15,000 is used to pay outstanding medical bills for the surgeries. The drunk driver goes to prison shortly after the accident and doesn’t own anything of value. The young man has recovered nothing for his pain and suffering from this accident and in fact still owes thousands to his providers and faces many more months of physical therapy and missed work with no way of paying for it all.
With UM / UIM coverage, you can protect yourself against those drivers with low or no policies. We recommend that our clients avoid waiving this coverage in exchange for a lower premium, if possible.
Insurance companies offer a lot of add-on coverages such as rental reimbursement, gap coverage, and towing costs. Whether you should have them on your policy depends on individual circumstance and expense. Of course, we always recommend choosing full tort over limited tort.
If you are involved in an accident in Pennsylvania, contact an attorney for an explanation of what your automobile policy will provide for you. Get the best insurance coverage that you can, but stay safe and hope that you never have to use it!