Auto Insurance And Funeral Expenses: What's Covered?

If a person dies in a car accident, their loved ones are faced with the emotional distress and financial burden of organising a funeral. The cost of a funeral can be high, with an average cost of $7,000, not including the potential cost of a burial plot or cemetery fees. This can be financially devastating for the deceased's family. In some cases, auto insurance will cover funeral expenses. It depends on the type of insurance coverage the deceased had. Personal injury protection (PIP) and medical payments coverage (MedPay) can cover funeral costs. In some states, these are required by law, but in most, they are optional. If the deceased was killed by a driver acting negligently, their loved ones can pursue legal action against that driver.

Personal injury protection (PIP) insurance

Personal injury protection (PIP), also known as "no-fault insurance," is a type of auto insurance coverage that pays for medical expenses and lost wages resulting from a car accident, regardless of who is at fault. PIP is mandatory in some states and optional or unavailable in others. It covers the policyholder, their passengers, and in some cases, pedestrians or cyclists injured by the insured vehicle.

PIP insurance covers medical expenses for both injured policyholders and passengers, even if they do not have health insurance. It also provides payments for lost income, childcare, and funeral expenses related to the accident. In the event of a fatal car accident, PIP insurance provides a death benefit to the policyholder's family.

The amount of coverage provided by PIP insurance varies by state and insurance company. Some states require a minimum amount of PIP coverage, while others allow drivers to choose between a fault and no-fault insurance system. PIP coverage limits are typically set at a maximum of $25,000 per person.

In no-fault states, PIP coverage is crucial because it allows drivers to receive compensation for their injuries and medical expenses from their insurance provider, regardless of who is at fault. Policyholders with PIP coverage can receive benefits even if the other driver is uninsured.

It's important to note that PIP insurance does not cover expenses unrelated to personal injuries, such as vehicle damage, theft, or damage to someone else's property. Additionally, PIP insurance may have a deductible, and claims must be filed within a specified time frame.

When it comes to funeral expenses, PIP insurance can provide valuable coverage. In no-fault states, death benefits, including funeral and burial costs, are typically included in PIP coverage by law. In at-fault states, the bodily injury liability (BIL) insurance of the at-fault driver covers funeral costs associated with the accident, up to the policy limit.

No-fault coverage

No-fault insurance, sometimes referred to as personal injury protection (PIP), is a type of auto insurance that covers your medical expenses and/or loss of income when you are involved in a car accident, regardless of who was at fault. It is mandatory in some states and optional in others.

No-fault insurance is designed to reduce the demands on the court system associated with car accident-related lawsuits. With a no-fault policy, you submit your claim to your own insurance company, not the other driver's. The insurance company will then process your claim and pay for your expenses, according to the coverage limits established by your policy. An advantage of no-fault insurance is that, since there's no need to prove fault, claims can be paid much faster.

In no-fault states, if you purchased a PIP policy, it will automatically cover a minimum amount to be claimed by you or your passengers in the event of an injury, including certain death benefits like funeral and burial fees.

A typical no-fault car insurance policy covers medical expenses, lost wages if injuries prevent you or your passengers from working, critical services such as childcare, and funeral expenses.

No-fault insurance is currently mandatory in 12 US states: Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah, as well as Puerto Rico. Three of these states (Kentucky, New Jersey, and Pennsylvania) are "choice no-fault" states, meaning they offer residents the choice between a no-fault and a traditional insurance policy.

It's important to note that no-fault insurance doesn't cover damage to your vehicle. This would be covered by either your collision insurance or the other driver's liability policy.

Accidental death coverage

When purchasing Accidental Death Coverage, it is important to understand the limitations and requirements. For example, there is usually a specified time frame within which the death must occur after the accident, often within 90 days. Additionally, insurance companies have strict definitions of what constitutes an "accidental death," excluding deaths resulting from illegal activities, hazardous hobbies, or pre-existing conditions.

In the unfortunate event of a covered auto accident-related death, the process for claiming the death benefit typically involves contacting the insurance agent, filing the claim, providing necessary documentation, and proving your relationship to the deceased. While Accidental Death Coverage may not be necessary for those with comprehensive life insurance policies, it can provide valuable financial support to those without life insurance or with limited coverage.

By adding Accidental Death Coverage to their auto insurance policy, individuals can ensure that their loved ones will receive some financial assistance during a difficult time, helping to alleviate the financial burden associated with funeral expenses and other end-of-life costs.

Liability insurance

In the event of a fatal accident, liability insurance can provide financial protection up to the policy limits. For example, if you are at fault in an accident and the other driver or their passengers suffer injuries or death, your liability insurance will cover their medical costs and, in some cases, funeral expenses. However, if you only have liability insurance and cause an accident, you will be responsible for paying for your own vehicle repairs and medical expenses.

To summarise, liability insurance covers damages and injuries caused to others in an accident, but it may not include funeral expenses. It is important to review your policy carefully to understand the extent of your coverage and consider additional coverage options like PIP or MedPay to ensure funeral costs are covered.

Uninsured or underinsured motorist coverage

Uninsured motorist coverage comes into effect when you are hit by a driver with no auto insurance. On the other hand, underinsured motorist coverage protects you when the other driver doesn't have sufficient insurance to cover the damages or injuries they caused. These two types of coverage are usually offered together, and they can provide valuable protection in case of a hit-and-run accident.

In the unfortunate event of a fatality in a car accident, funeral costs can be covered by the at-fault driver's insurance, up to their policy limit. However, if the at-fault driver is uninsured, the uninsured motorist insurance of the other party may cover the funeral expenses. This coverage is typically paid to the legal representative, a surviving family member, or any other person equitably entitled to the benefit.

It is worth noting that there are different types of auto insurance coverage, including liability-only and full coverage. Liability coverage deals with damages to someone else's car or property, as well as bodily injury. Full coverage includes all parts of liability coverage and also covers your vehicle and medical costs if you are at fault. Additionally, personal injury protection (PIP) and medical payments coverage (MedPay) can provide additional protection in the event of injuries or death in a car accident.

Frequently asked questions