Saturday, October 22, 2011


As mine is coming up for renewal, I've been looking around at some different companies and getting quotes. One of the things I was a little unsure of is what all the different coverages were actually for and Patrick (Patrick) was kind enough to send me the following link and I share it herewith for your Information.


Have you ever wondered what all of those numbers mean on your auto insurance declarations page? Your insurance agent tells you that you need to have certain coverages and oftentimes he or she helps you decide on the amount of the coverage, but do you really understand why? Many consumers pick insurance coverage according to their budget. We all know that the more insurance we carry, the higher the premiums and frequently we pick lower coverages because of financial constraint. Next time you purchase insurance or when your renewal comes due, keep the following in mind and carefully review your declarations page to see if you need to adjust your coverage.

We carry insurance in case we are involved in an accident. The State of California requires that you carry Bodily Injury Limits (BI) of $15,000/$30,000 and Property Damage (PD) in the amount of $5,000. No other coverage is required by the State, but there are many more coverages available. An understanding of the types of coverage and what they actually provide is a necessity.

Bodily Injury - This is required by the State of California and it is the most expensive part of your coverage. Bodily Injury coverage protects you and your assets if you cause an accident and cause injury to another. This is the coverage that would be available to the injured person if they made a claim and/or filed a lawsuit against you. The State requires that you carry at least $15,000/$30,000. What this means is that your insurance company will indemnify (pay) personal injury damages of up to $15,000 per person per accident, but not more than $30,000 total per accident regardless of the number of persons claiming injuries.

Bodily Injury Limits come in many amounts, you can have $15,000/$30,000; $25,000/$50,000; $30,000/$60,000; $50,000/$100,000; $100,000/$300,000 and so on. To determine your coverage needs, consider that if you cause an accident and injure another, what coverage would you need to protect your assets, home, and your family? Bodily injury coverage is expensive, but it is one of the most important coverages on your auto insurance.

Property Damage - This coverage is for damage sustained to any vehicle (other than your own) or other property (highway signs, telephone poles, structures, etc) when you are involved in an accident. The minimum coverage is $5,000, an amount insufficient to repair most vehicles in a moderate accident. Furthermore, this coverage is for all damages in a single accident, so if you are involved in a multiple car accident, damage State, County or City property (i.e. traffic signs, signals, etc.), or you damage a structure, you may not have enough coverage. Property damage coverage is relatively inexpensive and you should ask your insurance agent about the property damage coverages available.

Comprehensive - This coverage covers your vehicle if it is broken into or sustains damage unrelated to an auto accident (i.e. a tree limb falls on your car, fire damage, or your car is burglarized or vandalized). Under this coverage, you will have to pay a deductible before the insurance company will repair the damage to your vehicle or replace stolen property. The deductible varies from $100.00 to $500.00 or more, and the cost of the coverage decreases as the deductible increases.

Collision - This coverage pays for damage to your vehicle when it is involved in a collision. This coverage will pay regardless of fault. Under this coverage, you will have to pay a deductible before the insurance company will repair the damage to your vehicle. As with comprehensive coverage, the deductible varies from $100.00 to $500.00 or more, and the cost of the coverage decreases as the deductible increases.

Medpay (MP) - This coverage is available to pay your medical bills if you are involved in an accident, regardless of fault. This coverage will pay up to its limit for a single accident for you and each person in your vehicle that sustained an injury. This portion of your policy can also cover you if you are in someone else's vehicle and either they do not have MP coverage or that coverage has been exhausted. This coverage is only for you and others in your vehicle. It does not cover persons in any other vehicle involved in the accident.

Also this coverage usually pays regardless if you have a group health insurance policy that would cover your medical bills. Medpay coverages vary because the State does not require it to be carried or even offered. Some policies will pay a set amount while others may require a deductible and/or co-pays. It is important that you read your policy or question your agent about the coverage.

Medpay coverage designated as Excess Medpay (MPX) will only pay after your group health insurance (if any) has paid. It will then pay your co-pays or out of pocket expenses not covered under your group health policy. It is usually less expensive than traditional Medpay because your group health insurance (if any) must pay before the MPX will even consider a claim.

Medpay coverages may contain a clause in your auto insurance policy that requires reimbursement to the insurer if you settle an injury claim against another party for the accident.

Coverages vary from company to company. To add or increase Medpay coverages will increase your premiums, but can be worth the extra expense to have additional assistance with your medical bills if you are involved in an accident.

Uninsured Motorist/Underinsured Motorist (UM/UIM) - After your BI protection this is probably the most important coverage. This protects you and your family if you are injured in an accident, that is not your fault, and the other party is either 1) Uninsured; or 2) Does not carry enough insurance to compensate you or your family for your injuries and damages. While the State of California requires all drivers to carry insurance, there are many uninsured drivers still out there. The minimum limits of insurance required by the State are $15,000/$30,000 and may not be enough to compensate you and your family if you are involved in an accident with someone who carries minimum limits.

A good rule of thumb is to carry as much UM/UIM coverage as you do in Bodily Injury (BI) coverage. You want to be sure that you adequately protect your assets with your BI coverage and you also want to be sure that you protect you and your family with your UM/UIM coverage. Under California Law, if you chose not to have UM/UIM coverage, you must sign a waiver denying this coverage. Denying this coverage can be a mistake.

-An Consumer Safety Update.