Almost everyone is aware that auto insurance has its own set of terminologies, mostly misunderstood or not understood at all by the common man. Yet everyone known knows the importance of getting an auto insurance policy; it is mandatory as per the law. In addition to the basic coverage as put forth by the law, there are other additional areas in which one can obtain coverage.
Each state has different requirements when it comes to auto insurance, so one must always check what the basic requirements of that particular state are. The best person to approach is an auto insurance agent, who is well versed with the laws of the state and will provide assistance on questions pertaining to auto insurance policies.
No Fault States
It is very important to know if the state in which you reside is a ‘No Fault’ state. When both drivers are required to carry insurance for their own personal protection, then that kind of an insurance system is described as ‘No Fault’. Thus, it places a limitation on the individual’s ability to sue other drivers when it comes to payment for damages. When an individual resides in such a state, the basic liability policy has already been made provisions for, in this coverage. The amount of coverage that is sought is all that one is given protection for.
Personal Injury Protection
Insurance cover known as PIP or Personal Injury Protection is also something that is most common. In those states where Personal Injury Protection is not mandatory, it can be included in the coverage, at an extra cost of course. This is however not true for all states. Whether or not the state is a ‘No Fault’ state, it is for the company to decide when it comes to making exclusions and additional amounts.
How PIP is different from Bodily Injury
Personal Injury Protection is different from Bodily Injury coverage, because while the former covers you, the latter covers any passenger that may not be listed on your policy as well as occupants of other vehicles, and is listed in general liability.
Whilst driving, expenses may be incurred which is covered by the Medical Payment coverage. If an individual driving someone else’s vehicle (with sought permission) sustains injuries, or if a pedestrian is injured, this kind of coverage takes care of both.
Now, Personal Injury Protection doesn’t really take care of anything pertaining to costs, lost wages or even funeral expenses. In the event that an accident causes disability or is fatal, it is medical Payment Coverage that will provide for the costs incurred.
If one is planning on adding Medical Payment Coverage or PIP to their insurance plan unless mandated by the state, weigh the cost of coverage versus the other policies that are effective in the policy.
It must be remembered that basic life, health and disability insurance also provide you with the same benefits, if one does not have one of these, then opting for it would make a lot of sense.
Reading the exclusions is a must when you are choosing the right auto insurance policy. Exclusions differ from company to company; each company has its own established exclusions. Basic exclusions may be part of all insurance policies, such as when an individual is driving a business vehicle.
If you’re considering the addition of liability medical payments, then it is necessary to also consider if it is possible to make monthly payments, and your financial situation must also be taken into account.