It’s the beginning of the year, and many Americans are focused on their New Year’s resolutions. Maybe you want to spend more time in the gym, change careers, or focus on your relationships. Whatever you decide, there’s one resolution you shouldn’t skip out on this January: reviewing your car insurance policy.
Make financial protection a priority in 2021 by contacting your insurance agent to go over the details of your car insurance policy. Alternatively, you can obtain a copy of your policy’s declarations page, which contains everything you need to know about your current coverage.
Remember: taking stock of your auto insurance policy on a regular basis ensures that you know exactly what’s covered in case of a car accident.
Which Car Insurance Coverages Should I Get?
In the United States, having car insurance is required by law in every state except New Hampshire and Virginia. How much coverage you need to have, however, may vary from state to state. The type of insurance required by each state is also variable.
For example, while almost all states require minimum bodily injury liability, some states—such as Illinois or New York—also require a minimum amount of uninsured/underinsured motorist coverage, too. Learn more about different auto insurance options and which ones are the most important below.
Most states are considered at-fault states, meaning that the insurance company of the driver who causes the accident is responsible (or liable) for paying for the injured parties’ losses. Liability insurance thus covers expenses to other drivers and passengers resulting from an accident in which you are determined to be at fault.
There are two kinds of mandatory liability insurance, called bodily injury liability and property damage liability. Bodily injury covers medical care for the people hurt in an accident, while property damage liability applies to vehicles and other property that may have been damaged.
For those living in a no-fault state, each driver’s insurance company compensates their own policyholder, regardless of who was at fault for the accident. States who utilize no-fault auto insurance policies include:
- New Jersey
- New York
- North Dakota
Personal Injury Protection (PIP) Coverage
Personal injury protection (PIP) coverage, also known as medical payments or med pay, is another type of coverage that can protect you in case of injury or damage resulting from an accident. PIP coverage is required in no-fault states, and optional in most at-fault states.
Even if you already have health insurance and live in an at-fault state, PIP can help you pay for medical expenses and copays that are not covered by your insurance benefits. It can also cover medical treatment for any passengers who were in your car at the time of the accident.
Uninsured/Underinsured Motorist Coverage
Liability protects you if you cause an accident. But what if you are injured by an uninsured motorist? Uninsured motorist or underinsured motorist inclusions can help you pay for medical bills and property damage if the at-fault driver does not have enough insurance coverage (or any insurance at all).
Collision coverage protects your vehicle if it is damaged as a result of a collision with another vehicle, a stationary object, or if someone hits your parked car, regardless of whether you were at fault for the collision. Collision coverage may also be helpful if you are ever in a hit-and-run accident.
For those who want extra peace of mind, comprehensive coverage covers almost any type of damage to your vehicle under the sun. This means if your vehicle is vandalized, stolen, or otherwise damaged by bad weather or natural disasters, you should be covered. Be sure to read your policy for full details and possible exclusions.
What Are Car Insurance Policy Limits?
Motorists are required to have minimum policies for coverages like bodily injury liability, property damage, and in some cases, PIP and uninsured motorist protection. All types of car insurance coverage will have what’s called a policy limit. Once you’ve maxed out this limit, you will not receive any additional reimbursement or settlements from your insurance company.
- In the U.S., minimum liability coverage for bodily injury liability per person ranges from about $15,000 to $50,000 per person. The most common minimum policy is $25,000 per person.
- Minimum liability coverage for bodily injury liability per accident ranges from $30,000 per accident to $100,000 per accident. The most common minimum policy is $50,000 per accident.
- Minimum liability coverage for property damage per accident ranges from $5,000 to $25,000. The most common minimum policy is $25,000 per accident.
It is important to pay attention to coverage limits when it comes to optional coverage as well, since they often increase your monthly premium and sometimes require higher deductibles.
Always read the fine print about your coverage amounts and deductible requirements to make sure you’re making the right financial decision for you.
How Much Car Insurance Do I Actually Need?
While it might be tempting to go with the lowest possible car insurance policy limits in order to save money on your monthly premium, this may cost you financially in the long run if you are ever in a car accident that results in significant property damage, catastrophic injuries, or even death.
Investing in higher coverage limits—although they may increase your monthly premium—can help you protect yourself and your assets should the damage from the accident exceed minimum coverage amounts.
For example, the minimum amount of property damage liability you must carry in New Mexico is only $10,000. But if you caused an accident in which multiple vehicles (including your own) were totaled, your $10,000 in coverage will be exhausted immediately. The same is true if the other driver was uninsured and the accident was not your fault.
To ensure your financial protection, Consumer Reports recommends an auto insurance policy that covers $100,000 per person, up to $300,000 per accident, and property damage of up to $100,000. If you own a home, it might be worth considering an umbrella policy that will protect your car and home and offer better discounts.
What to Do If You’re in an Accident in 2021
Injured in a car accident by an underinsured or uninsured driver? Worried your coverage limits won’t be enough to pay your medical bills, lost wages, or pain and suffering? You may have a personal injury case. Contact Lerner & Rowe Injury Attorneys today to schedule your free, no obligation consultation.