Why is My Automobile Policy So Long and Complicated?

We can’t blame the companies for producing policies that no one understands. Most of the wording of a car insurance policy is required by law. Insurance policies in Washington do not vary much from company to company.

There are three major parts of your policy that you must understand: The liability coverage, the personal injury protection (PIP), and the uninsured motorist (UM) coverage.

Liability Coverage

Liability insurance protects your assets if you cause a car wreck and hurt someone. The liability coverage you have will protect your assets from the person you injured. The insurance company will defend you (including hiring an attorney for you if you are sued) and pay the injured person up to the limits of the liability coverage you bought.

Personal Injury Protection

If you buy Personal Injury Protection (PIP) and you are injured in a motor vehicle accident regardless of who’s fault the accident is, then your insurance company will pay your medical bills up to the limits of PIP coverage you bought. This isn’t a free pass,  however. The insurance company has some rules; they will only pay for what is “reasonable, necessary, and caused by the accident.” Now, it doesn’t seem like this would be a problem… you are hurt and so you go to the doctor. Unfortunately, insurance is a business that is all about making money by taking in premiums and not paying claims. With PIP coverage, your insurance company can stop paying your medical bills if they hire a doctor, and the doctor that they hire says you don’t need any more treatment. As you can imagine, the deck is stacked against you.

In Washington, all insurers must offer PIP coverage with any auto insurance policy. Additionally, the only way an insurance company can avoid providing PIP coverage is if the insured signs a written waiver of PIP coverage. If the insurance company can’t produce a signed written waiver, then the insurance company must provide PIP coverage.

Uninsured Motorist and Under-Insured Motorist Insurance

If you buy Uninsured Motorist and Under-Insured Motorist insurance (UM/UIM) and a driver who has no insurance or not enough insurance hurts you, then your insurance company will pay you damages up to the limits of UM/UIM coverage you bought. Since the other driver is uninsured or under-insured, your company pays you. (Don’t feel bad—you paid for this protection.)

UM/UIM coverage is also very important for another reason. If you are the victim of a “hit and run” and the other driver is never caught, your UM/UIM coverage will protect you. 

Finally, your Under-Insured Motorist Coverage will also protect you if the other party had less insurance than you did. If you get hit by someone who bought a low amount of insurance ($100,000 or less) your own policy will provide you protection up to the amount that you bought for yourself.

UM/UIM is the same as PIP in that if you didn’t sign a written waiver at the time you purchased the policy, then the insurance company must provide it.

Why don’t they tell you that?

Just What Does “$25,000/$50,000” Mean, Anyway?

Whenever auto insurance coverage is expressed as $25,000/$50,000 or $300,000/$500,000, the policy is telling you what coverage is available “per person” injured in the accident and what total coverage is available for any one accident. So, if you have $25,000/$50,000 coverage, each injured person would be covered up to $25,000, but the total coverage available for the accident is only $50,000. If five people are hurt in the accident, the most any one person would be paid is $25,000 but all five people would have to share the total of $50,000. In this situation, if any one person’s damages exceeded $25,000, or if the entire claim of all people in the accident exceeds $50,000, you would be personally responsible for what the policy did not pay.

Do you see why we recommend a review of your policy?  For a comprehensive review of your insurance CONTACT us today.

Source: Premier Law Group