Accidents happen, so you need adequate protection. That is why you must be smart about the type of auto insurance coverage you purchase. The trend we see in our personal injury practice is that more and more people are either eliminating or drastically lowering key components of their coverage. We are sure this trend stems to some degree from the economy over the last few years, but it is not good. In fact, it may be a classic example of being “penny wise, pound foolish.” We often find that people do not even know what coverage they have or what any of the policy terms mean. Others have not modified their coverage for many years despite their financial and family circumstances changing significantly.
In Pennsylvania, there are three main aspects of coverage that you should focus on in determining what auto insurance coverage to purchase: (1) liability (used to pay others you might injure while driving); (2) uninsured and underinsured motorist coverage (coverage if the driver that injures you does not have adequate auto insurance); and (3) the choice between full tort and limited tort coverage (which affects what rights you have to pursue claims against a negligent driver). Rather than reducing these coverages, one might better attain cost savings by raising deductibles and eliminating other minor coverages that really don’t address major risks for which such insurance is really designed.
With respect to liability coverage, the law only requires you to carry $15,000 per person and $30,000 per accident. If you injure someone in an accident while carrying minimum coverage, your insurance company would cover up to $15,000 for each injured person to a total of $30,000 for the accident. For young folks and those with few assets that might be adequate coverage. However, for many people it would not be sufficient and could expose your personal assets in a lawsuit brought by someone you injured in an auto accident. It is often prudent to carry much higher limits such as $250,000 per person and $500,000 per accident and even higher limits depending on your specific financial and family circumstances.
While liability coverage protects you from claims by others, uninsured and underinsured motorist coverage (“UM/UIM”) gives you protection in case a negligent driver injures you but has no insurance or has coverage that is inadequate to fully compensate you for your injuries. You pay a premium to maintain your own protection against such circumstances when you purchase UM/UIM coverage. You can make a claim against your auto insurance carrier to the extent you are not fully compensated by the negligent driver’s insurance and request compensation up to the limits of your UM/UIM coverage. Because that coverage can be no greater than the liability limits you maintain, it is important to strike a good balance between those two aspects of coverage. The costs are usually very small compared to the additional protection you receive. Additionally, for just a little higher premium, you can elect stacking of all UM/UIM coverage on other vehicles under the policy which can provide additional needed benefits should you be seriously injured.
With regard to making a choice between full tort and limited tort coverage, we see too many people elect limited tort and, therefore, not be in a position to fully recover compensation from a negligent driver. Full tort coverage typically costs only about 15% more than limited tort coverage but the difference in your rights can be huge. Full tort coverage is preferred because you preserve the right to recover both economic (medical bills and lost wages) and non-economic damages (principally pain and suffering). Limited tort coverage allows you to only recover economic damages except in cases where you are very seriously injured. It can be very difficult and complicated to prove in a lawsuit that someone has been seriously injured as defined by the law. Absent proving serious injuries, you cannot recover for pain and suffering in a limited tort case, while that is often a substantial aspect of a personal injury claim.
We are not insurance experts so you should ultimately review your coverage with your insurance agent to make sure you have properly considered all aspects of your policy. Remember, auto insurance is designed to protect you from major risks. While we hope you will never need such protection, you want adequate coverage if something really bad occurs. Unfortunately, we see the negative results of misguided decisions regarding coverage in situations where folks who have been injured cannot make a full recovery or where their personal assets are at risk. A little planning could avoid such problems. We would be glad to review your policy for the purpose of identifying potential issues to address with your insurance agent.
— Curt Ward