Learn about Auto Insurance - Part 2

Continued from Part 1

This is the series of articles to learn about 'auto insurance' so that you understand well which kind of benefits you get from your insurance policy coverage.

Medical Payments/No-Fault Coverage

Medical payments coverage pays reasonable and necessary physician and hospital bills, and, if necessary, reasonable funeral expenses for you, your family and your passengers, regardless of who is legally liable in the auto accident. It does not cover pain and suffering.

It also covers you and your family members while in another individual’s vehicle or as pedestrians.

No-fault coverage, like medical payments coverage, pays reasonable and necessary physician and hospital bills and funeral expenses. No-fault coverage also generally covers lost wages as well as the cost to replace household services normally performed by the individual injured in the accident. No-fault coverage does not cover pain and suffering.

There are two main objectives of no-fault coverage.

First, it speeds payment to accident victims.
Second, it intends to lower the cost of auto insurance by reducing the number of lawsuits for minor claims.

To accomplish these goals, each insured’s own insurance company pays medical expenses, lost wages and certain other financial losses resulting from an accident, regardless of who caused the accident. As a result, more accident victims are compensated for their injuries, and they are paid faster. In exchange for these benefits, no-fault laws may limit an insured’s right to sue; however, in cases of death or serious injury, no-fault laws generally allow policyholders or their families to sue.

Personal injury protection coverage implements the no-fault concept. States that have no-fault laws require drivers to buy personal injury pro-tection coverage. This coverage varies from state to state, and similar coverages may be offered as an option in states without no-fault laws.

Before you buy medical payments or no-fault coverage, clarify what it covers in your state. Then look closely at your current coverage. If you already have good medical and disability insurance, you may not need much additional protection. Avoid duplicating insurance coverages. Your insurance company or agent can help you determine what coverages and limits to buy.

Uninsured/Underinsured Motorist Coverage

In most locations, at least 1 in 10 drivers has no liability insurance. In some locations, as many as half of the drivers may be uninsured. That is why insurance companies sell, and many states require, uninsured motorist (UM) coverage.
If an uninsured driver is legally liable in an auto accident, uninsured motorist coverage:

Pays what the individual’s insurance company would have paid if that individual had liability insurance.
Covers you, your family and your passengers for medical expenses, lost wages, and other injury-related losses including pain and suffering, up to the uninsured motorist limits you purchase.

In some states, uninsured motorist coverage also pays for damages to your vehicle after a deductible. If you already have collision insurance, though, this coverage may not be needed.

You must be careful not to duplicate coverage if you are to get the most from your insurance premium dollars. Examine the coverage you already have before buying more.

If you have good life, medical and disability income insurance, you may need less uninsured motorist coverage. Likewise, if you carry high no-fault coverage limits, you may need less uninsured motorist coverage because no-fault covers you for medical bills and lost wages regardless of who is legally liable.

In most states, when you buy uninsured motorist coverage, you also can buy underinsured (UIM) motorist coverage for bodily injury to you, your family or your passengers resulting from the negligence of someone whose liability insurance limits are insufficient.

The definition of an underinsured motorist varies significantly from state to state. In most cases, property damage is not included in underinsured motorist coverage.

Continued on: Part -3