We know that auto insurance is mandatory and we see all of those coverages on our declarations pages, but what does all of it mean? Let's start a little series to demonstrate the effect of all those coverages.
Picture this... It's a beautiful Friday afternoon. You are on your way home from work & it's rush hour on Route 22. You are driving a 2017 Chevrolet Tahoe. There are cars everywhere & you are following a 2021 Cadillac CT4. In your rearview mirror, you are watching a Ford Mustang weave in & out of traffic - we've all seen that before, right? Just as you see them cut off a minivan and you're shaking your head, mumbling something to yourself, traffic ahead of you comes to a halt & you rear-end that Cadillac.
The other driver seems to be fine but the passenger has whiplash & the ambulance takes them from the scene.
| Bodily Injury Liability | $50,000 per person/$100,000 per accident |
| Property Damage Liability | $50,000 per accident |
| Uninsured/ Underinsured Motorist | $15,000 per person/$30,000 per accident - Nonstacked |
| Medical Benefits | $5,000 per accident |
| Work Loss Benefits | $1,000 per month up to $5,000 |
| Tort Option | Limited |
| Comprehensive & Collision | $100 comp deductible/$500 collision deductible |
| Towing & Rental Expense | $75 towing/$30 a day up to $900 rental coverage |
Bodily Injury Liability is coverage for the other parties injuries (driver & passengers) and Property Damage Liability is coverage for the other parties property damage, whether it be their vehicle, their house or even the states' guardrails.
So let's look at our scenario & see how this plays out...
For Bodily Injury, you have coverage for $50,000 per person up to $100,000 per accident. The passenger has whiplash & was taken by ambulance to the hospital to get checked out. "Geez, it's only whiplash", you say - but when you total ambulance costs, EMS costs, hospital costs, possible x-rays, doctor charges, possible medication and possible physical therapy, it adds up quite quickly! You have $50,000 coverage. Hopefully, the total of injury is under that amount; when it is exhausted, it does not start to come out of their healthcare insurance - it comes out of your pocket. The hard truth is that if you are not able to compensate them for the injuries you caused, they could potentially sue you for the remainder, possibly going after other assets you may have.
There is still that $100,000 per accident coverage, right? This limit of coverage is commonly misinterpreted; it only comes into play when there are multiple people injured. Under the coverage in this scenario, there could be multiple passengers but the maximum payout is $100,000. Essentially, you'd have coverage for 5 people in the vehicle, as long as they don't have over $20,000 in injuries.
Lastly, let's check out the property damage coverage in this example. You rear-ended a 2021 Cadillac CT4, worth around $47,000 on base models. Now, it's a stretch for the Cadillac to be totalled in this case but depending on how fast you were going, it is certainly possible. You have $50,000 coverage for their vehicle to be repaired or replaced. With the majority of vehicles on the road costing every bit of $50,000 you'd typically want to protect yourself & carry higher limits of coverage.
As you can see, it may not take long for those expenses to add up. So how much coverage should you have? The answer to that varies form person to person but you should feel comfortable with the amount you choose - not just hope it doesn't happen to you. Knowing what we all know about the costs of healthcare & rising vehicle costs, to say they are inflated is an understatement. So, ensuring that you are protected enough to cover the financial burdens in the event of an at-fault accident should be your primary concern. After all, you are protecting yourself.
Auto accidents happen. Vehicle congestion in the Lehigh Valley & surrounding areas continues to increase, as well as new construction zones around every corner making traffic come to a quick stop at times. We have only talked about bodily injury & property damage liability so far and we've found out there is barely enough coverage in this illustration. In the next parts, we will begin to see how coverage for you & your vehicle work, as well as some things that may be unexpected.
Disclaimer : This article explains general knowledge for the purpose of education & information. Snyder Insurance Agency is not providing nor guaranteeing any insurance coverage within the above mentioned. Any & all claims, or coverage discrepancies and decisions will be an obligation of the insurance company at the time of loss.
