Insurance coverage and its lingo can be confusing — collision, medpay, liability, UIM, uninsured, 50/100, 25/50/25, 500 single limits. Many times people come to us and say they have “full coverage” but are not sure what that means.
You can think about insurance policies like a pair of painter’s pants. There are lots of pockets with a certain amount of money in them and various rules that allow you to use the money in certain pockets to compensate you for specific losses.
1. Liability-bodily injury: This pocket provides coverage for injury claims brought against you by people hurt in a collision you caused. In Idaho, drivers are required to have a minimum of $25,000 in liability coverage for 1 person hurt and a minimum of $50,000 for all injuries in a collision. These are the first 2 numbers you see in a policy description like 25/50/25.
2. Liability- property damage: This pocket provides coverage for property damages to others — such as another person’s car or a fence you run over in a collision you damage — which you cause or are responsible for. In Idaho, drivers are required to have a minimum of $25,000 in property damage. This is the third number in a policy description.
3. Medical Payments: This pocket (Med Pay) pays for medical costs incurred by the driver and other passengers in the policy owner’s car. It can be as little as $1000, but is frequently much more. This is not mandatory coverage and you have to choose it when buying a policy. This is insurance that protects you, your friends and your family – without regard to fault.
4. Uninsured Motorist Coverage: This pocket (UM) is available when the negligent driver either has failed to buy insurance or it was a hit and run collision. This is again insurance that protects you, your friends and family. In Idaho insurance companies are required to give you the opportunity to buy this insurance and you must sign a waiver form if you choose not to. Our advice is BUY IT. Check with your company for many of them this covers only bodily injury losses though some companies also include property damage losses.
5. Underinsured Motorist Coverage: This pocket (UIM) is available when the negligent driver’s liability insurance has paid the maximum amount under the coverage he bought. You dip into this pocket when the other driver’s insurance is simply not enough to fully compensate you. This is again insurance that protects you, your friends and family. In Idaho, insurance companies are required to give you the opportunity to buy this insurance and you must sign a waiver form if you choose not to. Our advice is BUY IT. Check with your company for many of them this covers only bodily injury losses though some states also include property damage losses. Be careful though some companies sell PHANTOM UIM COVERAGE. That is they sell you $25,000 in underinsured coverage and take a credit against it for every dollar you recover from the other driver’s insurance. Because Idaho drivers are either uninsured or required to have at least $25,000 in coverage the UIM policy never provides you a benefit. As you purchase insurance, make your agent show you how that coverage will work.
6. Collision Coverage: This pocket is to covers losses to your car when you are involved in a collision. It applies no matter who was at fault. It usually has a deductible which is an amount you must pay before the insurance kicks in.
7. Comprehensive: This pocket covers most non-collision physical damage to your car like if your car is damaged in a storm, or a windshield breaks. This also has a deductible in most policies.
Those are the basic insurance coverage options. Many companies also offer additional things like roadside assistance, towing, rental car reimbursement and other limited benefit coverages. We recommend you go through all the possible coverages and chose those that are right for you. But our fundamental advice is to buy as much uninsured, underinsured and med pay coverage as your budget allows because those coverages are designed to protect you and the people you love.