Understanding The Different Types Of Auto Insurance Claims

Auto insurance provides property, liability, and medical coverage. Property coverage pays for damage to, or theft of, the car. Liability coverage pays for the policyholder's legal responsibility to others for bodily injury or property damage. Medical coverage pays for the cost of treating injuries, rehabilitation, and sometimes lost wages and funeral expenses.

There are several types of auto insurance claims, depending on the type of coverage and the incident in question. Here are some common types of auto insurance claims:

- Liability insurance claims: These cover damage to an individual or property in an accident where the policyholder is at fault. Liability insurance includes bodily injury and property damage coverage.

- Personal injury protection (PIP) and medical payments (MedPay) claims: These offer reimbursement for bodily injuries to the policyholder or their passengers, regardless of who was at fault. PIP may also cover lost wages.

- Comprehensive and collision insurance claims: Comprehensive insurance covers damage to the car from events outside the driver's control, such as vandalism, theft, or natural disasters. Collision insurance covers damage from accidents, regardless of fault.

- Uninsured and underinsured motorist claims: These cover accidents involving an at-fault uninsured or underinsured driver. Uninsured motorist coverage will reimburse the policyholder if they are hit by an uninsured or hit-and-run driver. Underinsured motorist coverage applies when the at-fault driver's insurance is insufficient to cover the damages.

Bodily injury liability

The amount of bodily injury liability coverage one should get depends on the state minimum requirements and the individual's net worth. While the average bodily injury liability claim is $22,700, experts recommend getting coverage of at least 100/300/100 for bodily injury and property damage liability. Carrying only the minimum limits required can leave one exposed to risk.

Medical payments or personal injury protection (PIP)

Medical Payments (MedPay)

MedPay covers the medical payments of the policyholder and their passengers if they are injured in a car crash. It is not a required coverage, and the specifics of what it covers may vary depending on the policy. For example, MedPay may only reimburse health insurance deductibles and co-pays, and it typically does not cover lost wages or essential services for unemployed individuals. Additionally, MedPay may only cover expenses incurred within one year of the accident.

Personal Injury Protection (PIP)

PIP includes medical payments coverage and also covers other documented losses, such as lost wages. PIP is typically more comprehensive than MedPay and is written specifically for car-related injuries, which may be excluded from certain health insurance policies. In some states, such as New Jersey and Oregon, PIP is required, and it covers a range of expenses, including medical, rehabilitative, and living expenses, as well as lost wages.

Choosing Between MedPay and PIP

When deciding between MedPay and PIP, it is important to consider your health insurance coverage. If your health insurance provides adequate coverage for injuries sustained in a car accident, and MedPay is not required in your state, you may not need it. However, if your health insurance does not cover injuries resulting from car accidents, purchasing medical payments coverage is a good idea. On the other hand, if your state requires PIP, MedPay may be unnecessary, unless your state's limit on PIP is low, in which case MedPay could be a beneficial supplement.

Property damage liability

The average annual cost for liability car insurance (including both property damage liability and bodily injury liability) is $650.35, but this varies by state. The cheapest liability insurance cost is in North Dakota ($312.30 a year), while the most expensive is in Louisiana ($1,023.91 a year). The cost of car insurance, including property damage liability, is based on many factors, including your location, age, gender, driving record, and credit score.

It's recommended to buy enough liability insurance to cover what you could lose in a lawsuit. For example, car owners with a high net worth should consider a higher level of liability insurance. State-mandated minimums may not be enough to fully cover all property damage, and you are still legally liable for amounts above your insurance limits. Ideally, you'd have enough property damage liability coverage that you don't need to pay out of pocket if you cause an accident.

If you damage someone else's property while driving, provide your insurance information to the property owner. They can then contact your insurance company to start the claims process. Your insurer will work with the other party to assess the damage and pay for repairs, up to your policy's property damage liability limits. As a result of the claim, you will likely see your rates increase at your next policy renewal.

Uninsured and underinsured motorist coverage

Uninsured motorist (UM) coverage comes into effect when you or your passengers are injured in an accident involving a driver with no liability coverage. This means that if you are hit by an uninsured driver, or are the victim of a hit-and-run, your UM coverage will reimburse you for any medical bills or repairs to your vehicle. In some states, UM coverage is mandatory, and it is highly recommended for all drivers.

Underinsured motorist (UIM) coverage, on the other hand, protects you if you're hit by a driver who doesn't have enough insurance to cover the damages or injuries they caused. For example, if you are in an accident with a driver who only has the minimum required insurance, their policy may not be sufficient to cover the full cost of your medical bills or vehicle repairs. In this case, your UIM coverage would step in to cover the additional expenses.

The specifics of uninsured and underinsured motorist coverage can vary depending on your state and insurance provider. In some states, UM and UIM coverage are combined, while in others they are separate. Additionally, some states may require a deductible for underinsured motorist property damage (UIMPD) claims, but not for uninsured motorist bodily injury (UMBI) or underinsured motorist bodily injury (UIMBI) claims.

When considering your auto insurance options, it is important to review the details of your state's requirements and the specific coverages offered by your insurance provider. By understanding the potential risks and gaps in coverage, you can make informed decisions about your policy and ensure that you and your passengers are adequately protected in the event of an accident.

Collision coverage

Collision insurance is particularly useful for vehicle owners who drive a car worth protecting. This includes vehicles that are being leased or financed, newer and more expensive vehicles, and older vehicles that still maintain good value. When deciding whether to opt for collision coverage, it is important to consider factors such as the age of your car, the cost of repairs or replacement, and whether you could afford these expenses without insurance.

The cost of collision insurance can vary, and it is typically sold with a deductible of $250 to $1,000. A higher deductible will result in a lower premium, but it is important to weigh this against your willingness to pay for repairs out of pocket. Collision coverage can provide peace of mind and help you get back on the road after an accident without incurring sudden large expenses.

Frequently asked questions