Hey everyone! It’s been too long since we’ve posted anything. We’ll try to blend the purpose of this post between a good mix of information and ways to save. Since our prior posts focused on business insurance, we’re going to start in a more widely useful direction – personal insurance.
Auto insurance is, at least in the state of PA, a legal requirement – but probably far less than you think. In fact, state regulations only require that you carry liability coverage for the bodily injury and property damage of others, as well as your own personal medical expenses. The limits required by the state are similarly low – only $15,000 per person & $30,000 per accident for bodily injury, $5,000 for property damage, and $5,000 for medical expenses.
Here are some of the coverages you can purchase, as well as ways to save on them:
- Bodily Injury (BI) – BI covers your liability for injuries people NOT in your vehicle sustain in the event of an accident for which you are at fault. BI claims can get very tricky in PA. If you are responsible for an accident that injures the passengers of another vehicle, typically the medical payments coverage on the policy on the OTHER (non-responsible) vehicle responds first. It can quickly get convoluted, so in the interest of brevity, contact your agent for additional details of how coverage applies in the event of an injury. Ways to save – see notes after Property Damage.
- Property Damage (PD) – PD covers your liability for the damage done to the property of others in an accident for which you are at fault. For example, if you rear-ended a slower moving vehicle, back into a parked car in a parking lot, or take a turn too quickly and end up in someone’s front yard! Ways to save – in general, liability coverages are the most difficult to reduce your costs on – the most convenient way to save is by lowering your limits. However, especially if your driving record is clean, you won’t save as much by reducing limits as you might think. Other ways to reduce your rates include changing driver/vehicle assignments on your policy (the youngest driver on the oldest car, for example), purchasing a safer car, or doing something to reduce your daily (commute) or annual mileage.
- Uninsured/Underinsured Motorists (UM/UIM) – this coverage is similar to BI but in reverse. If you or your passengers are injured in an accident where another party is at fault, and that party either does not have any BI coverage (uninsured) or they don’t have enough BI coverage (underinsured) to pay for your injuries, UM/UIM will pick up the difference (up to your policy limits). Ways to save – the best way to save without reducing your limits (if you have multiple vehicles on your policy) would be to reduce your limits and add stacking. Stacking multiplies your UM/UIM limits by the number of vehicles on your policy. So, if you have two cars on your policy, and carry $50,000/$100,000 unstacked limits, you can reduce your limits to $25,000/$50,000 and stack the coverage. You will maintain the same total coverage (as long as you have at least two vehicles!) and pay less.
- First Party Benefits (FPB) – I will address these as a group, as they are typically lumped together in a batch on your policy. Additionally, they can be combined into one large limit for the whole group of coverages, instead of having separate limits for each. This is typically called blanketing coverage. I digress – the four FPB coverages are medical expense, income loss, accidental death, and funeral benefits. Each FPB coverage pays if you or your relatives (residing in your home) are injured or killed in an accident, regardless of who is at fault. Medical Expenses operates similar to health insurance – covering your actual medical & rehab costs. Income loss operates similar to disability coverage – covering your lost wages if you are injured in an accident and are unable to return to work. Accidental Death and Funeral Benefits, similar to life insurance, provide coverage in the event you pass away as a result of an accident. Ways to save – in order to get higher limits for less money, consider purchasing the combination option, where you get one lump sum for all four coverages, which you can divvy up as necessary. For example, instead of maintaining higher limits on each individual coverage, consider carrying combination coverage of $100,000 or $177,500. Additionally, if you already have health, disability, or life insurance, consider reducing or removing the applicable coverages from your policy.
In the interest of your sanity and keeping this short, I will stop for today. We’ll review the physical damage coverages you can purchase on your vehicle itself tomorrow.
In the meantime: