Many people assume when they buy car insurance, they are fully protected from all forms of disaster. For instance, many assume that if they are involved in a collision with another driver who is uninsured, their own insurance carrier will compensate them for their injuries and/or damages. However, this depends on the type and amount of coverage. Car insurance carriers often create policies that the average citizen cannot understand. This is primarily due to the fact that such wording in insurance policies is mandated by law. However, in the midst of all those sophisticated words and sentences, there are 3 critical components of your insurance policy that all drivers should understand:
Liability Coverage – Liability insurance exists to protect your personal assets if you are responsible for a car accident and injure another person in the process. More specifically, your liability coverage acts as protection for your assets from the person you injured. Thus, your insurance company will defend you (i.e., representing you if you are sued), and provide monetary compensation to the injured party. However, it is imperative to understand that the amount in which your insurance policy can afford to cover is limited by the amount of liability coverage you purchased as part of your plan.
Personal Injury Protection (“PIP”) – Imagine you suffered an injury in an automobile collision. Whether you were the party at fault or not, if you purchased PIP, your insurance carrier is obligated to pay your medical bills up until the limit of the PIP plan you signed up for. However, this is not a complete obligation. Your insurance carrier reserves the right to only pay for what is deemed “reasonable, necessary, and caused by the incident”. More specifically, if you are injured and referred to see a doctor by your insurance company, your insurance company is obligated to pay for your visits. However, once the doctor determines you do not need any additional treatment, your insurance carrier will no longer be expected to fund your medical bills.
Uninsured Motorist and Under-Insured Motorist Insurance (“UM/UIM”) – It is wise to purchase UM/UIM for the following reasons:
1. If you are hit by a driver with no insurance or insufficient insurance, your insurance carrier will pay you for the damages up to the limit of the UM/UIM you signed up for.
2. Imagine you are the victim of a hit and run, and the other driver is never found and brought to justice. If this happens, your UM/UIM will cover your damages to the amount of your policy limit.
3. Lastly, your UIM plan will also serve as protection if you are hit by another party who has less insurance coverage than you do. If the other person purchased insurance less than $100,000, your policy will cover the damages up to the amount you purchased for yourself.
If you have questions regarding your automobile insurance policy or if you were involved in a car crash, please contact Ada K. Wong of AKW Law, PLLC at firstname.lastname@example.org or (425) 954-3512.