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Automobile Insurance: Are You Covered?

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By Jason R. Markle

The coming of a new year is often an occasion for people to look at changes they can make to better their lives. People often look at how they can lead healthier lifestyles, save money or improve their relationships. It’s also a good time to look at how protected you are in the case of an accident in which you or someone else is injured. One of the best ways to do that is to take a look at your automobile insurance policy and determine if you have enough coverage. And in looking at your coverage, there’s much more to consider than just price. For example, will your medical bills and lost wages be covered following an accident? What happens if you’re seriously hurt by someone without enough coverage? Who pays for damage to your vehicle as a result of vandalism?

To answer these questions, it’s important to know that the Standard Massachusetts Automobile Policy offers 12 types of insurance. By walking through them individually, hopefully you’ll have a better idea of what’s covered and, more importantly, what’s not covered.

Parts 1 & 5, Bodily Injury to Others: Bodily injury coverage is one of the first things people think of when then think of automobile insurance. It covers anyone who is injured or killed by your automobile, as long as it is being used by you or by someone with your consent. Under Massachusetts law, the minimum bodily injury coverage is $20,000 per person, $40,000 per accident. This means that the maximum recoverable by any individual person injured by your automobile is $20,000, and the most that your insurance company will ever pay out for one accident, regardless of how many people are injured or killed, is $40,000. Anything above these amounts is your personal responsibility. Most experts recommend that you carry bodily injury coverage limits of at least $100,000 per person, $300,000 per accident. If your limits are at $20,000/$40,000, you should talk to your agent. Raising your coverage to $50,000/$100,000 or $100,000/$300,000 is probably cheaper than you’d expect.

Part 2, Personal Injury Protection: Personal Injury Protection (commonly referred to as PIP) is a no-fault benefit required by Massachusetts law. As a no-fault coverage, you are entitled to these benefits regardless of whether an accident is your fault or not. Under Massachusetts law, you are required to carry $8,000 in PIP coverage. This coverage can be used to pay for medical bills, lost wages and replacement services. In examining your PIP coverage, the most important thing to look for is whether your PIP coverage carries a deductible. Although Massachusetts law requires this coverage, the influx of new insurance companies in Massachusetts and the constant battle to be the cheapest has led some insurers to slip in deductibles for PIP coverage, essentially negating the coverage altogether. Check your coverage and make sure that you do not have a deductible on your PIP coverage. Saving a few dollars a month just isn’t worth the risk of having to pay up to $8,000 in medical bills out-of-pocket, or having no coverage for your lost wages if you’re disabled as a result of an accident.

Parts 3 and 12, Bodily Injury Caused by an Uninsured/Underinsured Auto: I lump these two coverages together because they typically go hand in hand. If you’re seriously injured in an automobile accident that was caused by someone who has no insurance or minimum coverage, these are the coverages you’d look to in your insurance policy to protect yourself. Your insurer would only be liable to pay uninsured/underinsured benefits if you would be legally entitled to recover from the owners or operators of the uninsured/underinsured automobile. In that scenario, your insurer would basically step into the shoes of the negligent driver that caused your injuries. Under Massachusetts law, uninsured/underinsured coverages can not be set higher than your bodily injury coverage. Essentially, this means that you can’t protect yourself more than you protect others. Considering that 1 in 7 drivers in the United States is uninsured, having coverage limits of at least $100,000/$300,000 should be a no-brainer.

Parts 4, 7, 8, 9, 10 & 11: Property Damage, Rental Coverage and Towing/Labor: There are generally 4 types of insurance in Massachusetts that cover property damage. These include damage to someone else’s property (Part 4), collision (Part 7), limited collision (Part 8), and comprehensive (Part 9). There are also separate coverages for rental vehicles and towing/labor which are fairly straight-forward. The minimum coverage in Massachusetts for property damage to someone else’s vehicle (Part 4) is only $5,000, although most people justifiably carry limits much higher than this. Parts 7, 8 and 9 all cover damage to your automobile. Under the 2 separate collision coverages, your automobile is covered from damage caused by a collision, which is ambiguously defined as “the accidental upset of your auto or any physical contact of your auto with another object.” Comprehensive coverage specifically includes “losses caused by vandalism, fire and theft, missiles, falling objects, larceny, explosion, earthquake, windstorm, hail, water, flood, malicious mischief, riot or contact with a bird or animal.” Look these coverages over with your agent to best determine which choice is best for you and whether you should opt for a higher or lower deductible.

Part 6, Medical Payments: Finally, the last remaining coverage is Medical Payments, commonly referred to as MedPay. This coverage applies to medical bills which are not otherwise covered by health insurance or PIP. This can include co-payments, deductibles and services which are not covered under your particular health insurance plan. So if you have a high deductible health insurance plan, or are one of the thousands of people in Massachusetts that still doesn’t have health insurance, you may want to look at this optional coverage.

Final Thoughts: When purchasing automobile insurance, be sure to keep in mind the issues raised in this blog post. Ask your insurance agent as many questions as you see fit to make sure that you are purchasing the best coverage package for you. Consider whether paying a few dollars more per month in premiums is worth significantly increasing your coverage in the event something terrible happens.  Finally, if you’ve been in an accident, and are having problems determining what is covered and what is not, feel free to call me for a free consultation at 508-821-4317.

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