ell, as a general principle, the more insurance you have the better. The more coverage you have, the better protected you are and the better protected your family is. The topic we’re going to discuss now is to answer the question.
How much auto insurance should I have?
So, the first thing you should do is you should find out what coverage you have right now. A lot of people have auto insurance but they really don’t know what kind of coverage they have or how much coverage they have. They don’t have any reason to really think about it until they get in an accident. Once you’ve been in an accident at that point, it’s too late to change your coverage. You can’t get in an accident on a Monday and figure out what coverage you have an event on a Friday, go buy the coverage you need and have it apply to Monday’s accident, it doesn’t work that way. So you don’t want to find out the hard way that you wish you had more coverage or a different coverage only to discover that it’s too late.
How can I find out what coverage I have right now?
One way is to check your policy, find your auto insurance policy look at the declarations page, that lists the type of coverage you have, the amount of coverage you have, and what deductibles you have. If you can’t find your policy or if you can’t interpret the declarations page you’re not sure about what it’s saying, then call your insurance company or call your insurance agent and they should be happy to explain it to you.
“Check the declaration page that lists the type and amount of coverage you have”
Car Insurance Full Coverage Actually Means
Let’s talk first about the term full coverage. Lots of my friend come to me and say “Well, I should be fine right? The other driver has full coverage or the person I was riding with has full coverage”. It’s a term that many people have heard, but until you’re involved in an accident or until you’ve been injured, you really don’t have much reason to think about what full coverage means.
“People think they have full coverage, but frequently are not covered for all types of loss”
Full coverage means different things to different people, it means things in different states. I’m just talking about car insurance Texas what one person means by full-coverage, may not be what another person understands it to be. Full coverage really just refers to damage to the vehicle. So it’s talking about property damage claims, we’re not talking about injury claims. For there to be full coverage on a vehicle that means damage to that vehicle will be covered no matter how it happens, whether it happens because it was stolen because the vehicle was burned, because a building fell on it, or because it was involved in an accident.
Full coverage also means that damage caused by the driver of that insured vehicle to another vehicle is going to be covered also by the liability portion of the policy. So to say that you have full coverage on your policy, you really need to be sure that what you understand to be full coverage and what your insurance agent or insurance company understands it to mean is the same thing. So, you know, when I hear the term full coverage, I know really don’t pay that much mind, I want to see the declaration page on the policy and actually see listed in black and white what coverages that person has.
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What type of auto insurance should I have?
There are two types of coverage you can have on an auto policy in Texas. One is the collision and the other thing is comprehensive and another optional coverage you must have. So let’s talk about collision first.
You can tell from the name this covers damage to the vehicle caused as a result of a motor vehicle collision, whether it’s with another vehicle or an object or whatever. If you have collision coverage on your policy, then no matter how your vehicle was damaged, whether it was your fault or the other driver’s fault, you hit a car, you get a tree, you get an object, you have coverage that will apply to repair the damage to your vehicle. That’s what collision means. There’s also another type of cover you can hang on your policy called comprehensive or pump.
“Collision coverage is the insured vehicle has been damaged due to a collision”.
This covers payment for damage to your vehicle caused by something other than a collision. For example, if your vehicle was stolen, it could be paid for under the comprehensive coverage, or if it caught fire that would be paid for under the comprehensive coverage. If a tree fell on it, like we saw on Hurricane Ike there’s a lot of tree damage to vehicles, if you had comprehensive coverage on your policy during Hurricane Ike on your own policy and at reef aliment, well then the damage to your car would be paid for under the comprehensive coverage. So that’s what comprehensive usability.
“Comprehensive is damage caused other than by a collision, e.g. Fire, theft or flood”.
There’s also a type of coverage on your auto policy that everybody will have and that’s liability insurance.
Everybody is required by state law in Texas to carry liability insurance. Liability insurance pays for property damage or injury that you do to another person when you’re driving covered vehicle. So, it would cover another person’s property damage if you damage or total their car or it would cover another person’s injuries. That is the one type of coverage that everybody with a registered vehicle driving on the roads in Texas must carry a liability.
Liability coverage pays for damage caused by the fault of the insured
A passenger can make a claim under liability coverage if the driver was at fault
Liability pays for damage that you caused to somebody else and that could include a passenger riding in your vehicle. For example, you have somebody riding with you as a passenger and you inadvertently run a red light and cause a collision, the passenger in your vehicle could make a claim against you under the liability portion of your automobile insurance policy. So, that’s liability coverage covers your liability for damage or injury that you caused to others.
Personal Injury Protection (PIP)
Let’s talk now about an optional type of coverage it’s a great coverage to have, not everybody does. I’m going to talk as briefly we have a separate article about PIP coverage that’s Personal Injury Protection, an optional coverage that you can take out on your policy to cover your medical bills or your lost wages, due to injuries sustained in a car accident. PIP coverage would also apply to passengers in your vehicle. The minimum amount of PIP coverage that most people have is twenty-five hundred bucks, you may have five thousand, ten thousand or more.
PIP is great because it’s a no-fault benefit, it doesn’t matter whose fault the accident was yours or the other drivers. PIP coverage will apply to the medical bills and lost wages due to that accident, but PIP isn’t free, not everybody has it, you have to choose it, I absolutely recommend that if you can afford to have PIP coverage you take it out.
Make sure you have PIP coverage on your auto policy
It’s one of those things that great to have if you’ve been involved in a collision because that coverage is available to you right away, even if things have to be worked out with the other driver’s insurance. For example, discussions about who was at fault while that’s up in the air, you can make a PIP claim on your policy and get those benefits pretty much right away.
There’s another type of coverage that is like PIP but it’s not the same thing, it’s called Medpay coverage. Medpay covers the same types of things as PIP, it covers medical bills and it covers lost wages usually it’s available in the same amounts as PIP, twenty-five hundred, five thousand, ten thousand. But the difference with Medpay is, in Medpay, your insurance company has a right to recover the Medpay benefits they paid you out of any settlement you were to get from another driver. So let’s say you’re involved in an automobile collision, the other driver is at fault and while your claim is pending you decide you want to get your hospital bill taken care, so you use your Medpay coverage on your policy and they pay the hospital bill. Well, when it comes time for you to get your injury claim settled with the other driver’s insurance company, your insurance carrier you paid that hospital bill using your Medpay. They’re going to want to get their money back out of the settlement you get from the other driver’s insurance company and that’s through a process known as subrogation and your insurance company will have a Medpay lien against whatever settlement you get from the other driver.
Medpay covers what PIP covers, but your insurer may get its money back later.
I definitely don’t like Medpay as much as I like PIP for that reason. I prefer PIP benefits because you can get those benefits to cover your medical bills and lost wages and then submit those same medical bills and lost wages to the other driver’s insurance carrier. So you are able to get a better recovery on your claim and obviously, that’s what I like to see my clients get and PIP is better than Medpay in that respect. So you should check your policy, first of all, see if you weave in half PIP if you don’t absolutely I recommend you get it and also check and make sure when you have PIP or Medpay.