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How does car insurance work?

admin   /   February 27, 2019

It’s important to understand how car insurance works before you end up injured in a car crash. As a car accident lawyer, I often assist clients who haven’t read their policy until after the fact. Make sure you have the coverage you need before you need it.

While most people have car insurance, few understand how it works. Let’s start by explaining some of the common categories your insurance covers. These include:

  • Bodily Injury Liability
  • Personal Injury Protection
  • Property Damage Liability
  • Collision
  • Comprehensive
  • Uninsured Motorist Coverage
  • Underinsured Motorist Coverage

We’ll look at each of these categories a bit more.

What is Bodily Injury Liability?

This covers injuries that you, the designated driver or policyholder causes to someone else. It also covers you and the family members you list in your policy when driving someone else’s car (with their permission).

What is Personal Injury Protection (PIP)?

Personal Injury Protection covers the medical bills for the driver and their passengers’ injuries. PIP will pay the medical bills no matter who is at fault for the collision.

What is Property Damage Liability?

Property Damage Liability pays for damages you cause with your vehicle. For instance, it would cover repairs to the other driver’s car if you struck it. This liability also covers other structures you hit with your car – such as fences or telephone poles.

What is Collision?

Collision pays for damage to your car if you collide with another car or object, or your car flips over. It can also pay for damage to your car due to driving over potholes.

What is Comprehensive?

Comprehensive will reimburse you for loss due to theft. It will also cover damages caused by something other than a collision with another car or object. This could include fire, vandalism, or contact with an animal, such as a deer.

What is Uninsured Motorist Coverage (UM)?

Uninsured Motorist (UM) coverage reimburses you if you, a family member or your designated driver is hit by an uninsured driver, a hit-and-run driver or an unidentified vehicle that forces you to have a collision. Generally, you should report (based on your policy) any accidents involving a hit and run or unidentified vehicle to local law enforcement with 72 hours and get contact information from anyone who witnessed the accident. Be sure to talk with your agent and check your policy for specific requirements.

What is Underinsured Motorist Coverage (UIM?)

Underinsured Motorist (UIM) coverage reimburses you if you, a family member or your designated driver is hit by another driver who has insurance but his or her policy does not provide enough money to pay for all your damages.

How much auto insurance do I need?

If you’ve been in a collision, don’t assume that the other driver’s insurance company will pay your damages!

According to a recent study, 17% of the drivers on Washington’s roads don’t carry insurance. That means if you’re in a collision there is at least a 1 in 6 chance that the other driver does not have insurance. Also, people who risk driving without insurance aren’t likely to be responsible drivers. They may have been in several accidents already and can’t afford insurance. Don’t let them destroy your life, too.

Even if a person who injures you in a motor vehicle collision has insurance, it likely won’t be enough. The minimum liability coverage that an insurance company must offer to a resident of Washington is $25,000. With the skyrocketing cost of medical care, $25,000 is not enough for most motor vehicle injuries.

Even a “minor impact” collision can cause serious physical and financial harm. For instance, most of our clients who’ve been in a rear-end collision may have minor vehicle damage. Yet, they may suffer from back and/or neck injuries as a result. Often, clients will see chiropractors, massage therapists, and physical therapists to find relief. Even a few months of this kind of treatment can cost more than $5,000!

More serious injuries can cause the medical bills to skyrocket quick. An initial visit to the ER with a CT scan or MRI will likely exceed $10,000. Any time a person is admitted to a hospital or needs surgery, the cost can quickly become too much for any middle class family to bear. With the right insurance coverage, however, those bills can be an afterthought and you can focus on your recovery.

When deciding what coverage to get, always err on the side of more. A policy with $35,000 in Personal Injury Protection is a good start. The Underinsured Motorist Coverage should be at least $100,000, but $250,000 is much better. Never settle for the minimum policy even if it saves you a little money up front. No one expects to be in a collision. But if you are, it is nice to know that you have a policy that can take care of your finances so you can take care of you.

Where to turn when you need more compensation

Unfortunately, having the right coverage does not always mean you will be fairly compensated.

Protecting your rights and your financial well-being starts with being prepared and knowing what to do if you are involved in a collision. Stopping your insurance company from delaying, denying, or wrongfully defending your legitimate claims is the focus of practice. If you need help with a car accident injury claim, please do not hesitate to contact our attorneys at Ladenburg Law. We help victims of car accidents in Tacoma, Seattle, Olympia and all of Washington. If you want to learn more about auto insurance and the injury claim process, you can request a free copy of Erik Ladenburg’s book What Insurance Companies Don’t Want You To Know by contacting us using the form at the top of our website.

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