When it comes to automobile insurance policies, there’s no doubt about it -it can be quite confusing. Many times an injured prospective client will contact a law firm thinking they have enough coverage to afford car repairs and medical bills. They only later find out the realities of the situation- that the coverage they have isn’t the right type to cover their expenses.
Here are some explanations of common auto insurance terms
Property Damage (PD) Coverage
This type of liability insurance protects third parties and is required of all Texas residents. The limits on this coverage are $30,000. PD coverage covers damages made to someone else’s property, not your car that was involved in the accident.
Bodily Injury (BI) Coverage
Bodily injury liability is another mandatorytype of insurance that is required in the state of Texas. Its minimum coverage limits are $30,000 per individual or $60,000 per accident. This portion of the policy covers the medical expenses suffered by another party as a result of an at-fault accident. It also can cover funeral costs, lost wages, pain and suffering, as well as punitive damages resulting from the event. Should you be determined responsible forthe accident, BI coverage protects your personal assets, should a judgment be issued against you.
These are the mandatory coverages, there are also some optional, yet prudent add-ons to have as well. These include:
Uninsured Motorist (UM) Coverage
As a measure of protection from uninsured or underinsured drivers with no liability coverage or from situations involving hit-and-runs, many Texans elect to take out UM coverage. When signing up for a new policy, it’s important to note that unless a waiver is signed, UM can automatically be tacked on to your policy even if you weren’t aware of it. It can cover medical expenses or property damages that result from a collision, especially if they exceed your policy’s PD or BI limits.
Personal Injury Protection (PIP) Coverage
Texas insurance companies are required to offer its customers personal injury protection coverage of at least $2,500 when setting up their policies. Much like BI coverage, PIP coverage provides protection not only for the driver of the car as well as his or her passengers at the time of the accident. Where it differs from BI is that it also extends its coverage to pedestrians that may be struck as well and its payout does not vary depending on who is at-fault for the accident. It also serves as an effective option for recovering lost wages that resulted from the accident as it covers them up to 80%.
While, as we discussed, PD coverage covers damage to another person‘s property, collision coverage is intended for repairs or replacement of your own. Even if you were found at fault for the accident, collision coverage could be utilized for necessary repairs.
In situations where your car has a tree fall on it, it gets stolen, vandalized or even damaged in a fire, comprehensive insurance is quite useful. It is used to reduce the costs associated with repairing or replacing your vehicle.
Understanding the different type coverages that make up your auto policy can help you make frugal decisions that also keep your costs down should an accident occur.