Car insurance coverage… what insurance companies don’t want you to know

.. and everyone should know

If you are like most people, you did not read the declaration pages of your car insurance policy, and therefore, there is a good likelihood that you are not carrying a sufficient amount of insurance. Well, you should read it!

Let us go through the different coverages:

Bodily Injury Liability (each person/each occurrence)

This is the coverage limit if you cause damage to someone else. In NY the minimum limits required are $25,000 ($25K) per person and $50,000 ($50K) per occurrence or accident. That means if you injure only 1 person, the most they can get is $25K, if you injure 2 people they can each get a maximum of $25K and if you injure 3 or more people, they would have to share a maximum of $50K.

Let’s face it; those limits are absurd in today’s economic times. In my opinion, no one in NY should be driving with less than a $100K/300K limit or preferably a $300K single limit policy, so that although the maximum limit per occurrence is $300K, there is no maximum per person limit.

Property Damage Liability

This coverage is for property damage you may cause to another car and/or property. In my opinion $100K should be the minimum limit to carry.

Basic Personal Injury Protection

The minimum in NY which everyone gets is $50K in No Fault benefits (covers all medical expenses associated with your treatment as a result of injuries sustained in a car accident, regardless of who is at fault. The host vehicle’s policy covers those benefits. If you are injured as a pedestrian, then the insurance carrier of the car that struck you is the primary carrier for the N/F benefits. In addition, you get up to $2K in monthly lost wages (calculated at 80% of you monthly salary not to exceed $2K per month if you are unable to work as a result of the injuries sustained in the accident.)

Those are minimums, but in my opinion, if you earn more than $30K a year, you should get APIP. Additional Personal Injury Protection doubles all of the benefits you are entitled to under No Fault (up to $100K in medicals, up to $4K in monthly lost wages etc).

Supplementary Uninsured (UI)/Underinsured Motorist Insurance (SUM)

That offers you coverage in the event that you get injured in an accident involving a car without insurance or with limited insurance coverages. Insurance companies don’t like to talk about these coverages (because they lose money on those) and regardless of how much in liability insurance you carry, they give you, the insured, only the minimum $25K/50K limits.

What that means is that even if you carry for example a $300K single limit liability policy to insure others, if you are injured by an uninsured or underinsured car, the most you would be covered for yourself is $25K.

Therefore, your UI, SUM limits should equal what your Bodily injury Liability Limits are.

So for example, if you have a $300K UI and SUM limit and you are injured by a car that is not insured, you will be covered for bodily injury claims up to $300K. If you are injured by a car carrying for example the minimum $25K bodily injury limits, if they tender their full policy, you have the availability to go after the SUM limits for another $75K.

I know this sounds complicated. If you have any questions about your car insurance policy, call me to discuss.