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While auto insurance has its own terminology, most of it is unfamiliar to anyone not involved in the industry.
We all know the importance of having it, with some being mandatory, there are additional coverage allowances that protect us even further.
Each state governs the requirements, so you should always check to be sure what your particular state requires.
The best place to obtain this information is to contact an insurance agent who understands the laws of your state when discussing automobile insurance coverage.
One factor when selecting an auto policy is to know if you reside in a “no fault” state.
Auto Insurance In-depth, describes “no fault” as, “an auto insurance system that both requires drivers to carry insurance for their own protection, and that places limitations on their ability to sue other drivers for damages.”
If you happen to reside in one of these states, your basic liability policy will provide this provision in its coverage. Keep in mind, this only covers protection for the amount of coverage you obtain.
Having several names within the industry, personal injury protection, or PIP, is the most common. In those states personal injury protection is not required, addition of the coverage is offered for an additional cost; however, not in all states. Regardless of “no fault” or not, additional amounts and exclusions are usually determined by the insurance company.
While bodily injury financially covers occupants in any other vehicle(s) involved and any passenger(s) not listed on your policy is included in your general liability auto policy, PIP covers you.
Medical payment coverage, sometimes called “MedPay”, involves expenses incurred while you are driving. In addition, it also provides coverage while driving someone else’s vehicle with permission and injuries sustained if you are a pedestrian.
While PIP covers medical expenses, it does not always cover costs associated with the injury, i.e. lost wages, costs and funeral expenses. While “MedPay” is another form of PIP, it provides added security of the costs associated with an injury, should an accident be fatal or disabling.
In consideration of adding PIP or “MedPay” to your policy, unless mandated by state law, you should consider the cost of the coverage versus other policies you may already have in effect.
While basic health, life and disability insurance would provide the same benefits, lacking any of these policies makes adding this a wise decision. Another question to ask is if your policy allows combining your coverage amount. In example, if you have two vehicles insured with $10,000 in medical payment coverage, will that allow a total of $20,000 should one accident occur?
One other thing when selecting the correct auto policy is to read the exclusions. Each insurance company establishes their own exclusions. While the majority of all policies contain basic exclusions (non coverage) such as use as a business vehicle (i.e. taxi), driving while under your employer’s coverage or workman’s comp, injury sustained in the commission of a crime and acts of war, your policy may contain additional items that could affect your financial outcome in the case of an accident.
With the exception of “no fault” states where coverage is mandatory, adding liability medical payments to your policy should be carefully considered in both your monthly and overall financial situation.