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Nov 14

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The Basics of Auto Insurance Coverage

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Automobile insurance is a far more complex topic than one might initially think.  There exists a wide variety of coverage insurance-policytypes: collision coverage, medical payments insurance, basic liability, underinsured motorists coverage (UIM), uninsured motorists coverage and more.  Then there are all the numbers.  Things like 25/50, 50/100/25, 300 single limits and many many more.  We have lost count of the nunber of times clients have come to us and told us about their “full coverage” but really have no idea what that means.

Your auto insurance policy is really a group of different insurance coverage that are used at different times, in deifferent ways and for different reasons.     Each one of the coverages has different rules that allow you access to the money that is there to protect and help you for specific losses.

Here is a very basic summary of some of the main types of coverages contained in IDdaho Auto insurance policies

A.  Liability-bodily injury:  This  coverage takes care of you by paying other people.  It is available when an injury claims is brought against you by people hurt in a collision you caused.  By law Idaho drivers must purchase a minimum of 25 thousand dollars in liability coverage for a person hurt in a collision and a minimum of 50 thousand dollars for all injuries in a collision.

B. Liability- property damage: This is again a coverage that pays other people,  In this case it is for the damages to others personal property.   This could be the other person’s car or bicycle or a fence that you hit with your car.  It pays when you cause such damage negligently,

C. Medical Payments Coverage:  This ype of insurance pays for medical costs incurred by you and other passengers in your car.  There is lots of variability in this coverage.  Some policies have as as little as $1000 in coverage.   Others as much as $100,000.  You have to choose to buy thus coverage because the law does not require you to have  But medical payments coverage protects people in your own car– friends, family and yourself – without regard to fault.

D. Uninsured Motorist Coverage (UM): Your uninsured or UM coverage is available when a negligent driver who hurts you has failed to buy insurance or if you get injured in a hit and run incident.  Idaho insurers must give you the opportunity to buy this insurance.  This is insurance that protects you and people you know and love.   If you reject it must sign a waiver form stating that you reject it.  We strongly recommend you BUY UM coverage.  It is usually pretty cheap.

E. Underinsured Motorist Coverage (UIM): Your underinsured (UIM) cpverage provides protects when a “bad guy” driver has injured you but his insurance covearge is too small to fully compensate you.  Remember all he is required to have in Idaho is 24 thousand dollars in coverage.  So if the other driver’s insurance does not contain enough money to fully compensate you then you have purchased this to protect yourself.  Just like UM , you have to waive this coverage when you purchase your initial policy.   And just like UM we advise you to BUY IT.  IN facts with both UM and UIM we recommend you purchase as much as you can afford within your budget.

You do have to be aware there are two kinds of UIM coverage:  “Offset” and “Stackable.”    Offset is what most companies sell and it can surprise you.  For example, if you are sold 25 thousand dollars in underinsured coverage the insurance company will 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 that same 25 thousand dollars in coverage the UIM policy never provides you a benefit. You should consult closely with your agent and understand what you are buying.

F. Collision Coverage: Collision coverage takes care of losses to your vehicle when you are involved in a collision with another vehicle.  There is a deductible which is an amount you must pay before the insurance kicks in.  Often it is better to use your own collision coverage and to let your insurance company get reimbursed by the bad guy drivers property damage insurance.  But collision coverage will apply even if you are the one who caused the collision.

G. Comprehensive Coverage: This type of coverage exists to take care of damage to your vehicle caused by reasons other than a collision.  For example, if your car is damaged by a falling tree, or in a hail storm or if a windshield breaks.   This also has a deductible in most policies.

Those seven are probably the most basic options for your insurance coverage on your car.  Of course, the insurance  industry has many smaller “add-on” coverages that might be right for you.  These include specialties such as roadside assistance, rental car reimbursement, towing  and other smaller benefit coverages.

Our advice is that you review all the possible coverages when purchasing your auto insurance and chose those that are right for you.

The number one thing we can say, and we encourage you to look very closely at this– buy the largest amount of uninsured, underinsured and med pay coverage as your budget allows.  Those are the coverages are designed to protect you and the people you love.

Permanent link to this article: http://holzeredwardsinjurylawyers.com/2016/11/the-basics-of-auto-insurance-coverage/

2 comments

  1. C L

    If offset auto insurance coverage effectively provides no benefit to the policy, why is it even allowed to be sold? Wouldn’t Idaho’s insurance regulators prevent that type of insurance from being sold?

    1. Kurt Holzer

      No the insurance regulators and the Legislature have let this be the law. It is a shame but real.

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