Whether your only exposure to automobile insurance is in the form of a commercial featuring a little green gecko, or you’re already paying for insurance on your minivan, pick-up truck, and motorcycle, many of us don’t know all of the relevant automobile insurance laws. However, it’s important to know at least some of these laws and how they affect your rights and responsibilities as a driver. For example, while there’s no federal law requiring you to have automobile insurance, almost all states require it and these states vary with regard to those requirements. Read on to learn about important automobile insurance terms and laws.
Common Types of Automobile Insurance Coverage
Having auto insurance means that in exchange for paying monthly premiums, your insurance carrier agrees to help pay for certain damage that occurs during a car accident or other mishap after you file a claim. The cost of your plan will depend on a number of factors, including your age, gender, driving record, where you live, and the type of coverage you select. Types of coverage include the following:
- Liability or Casualty Insurance: Bodily injury liability means that your insurance company pays for damage done to another person in an accident you caused. Property damage liability is for when you’re at fault for damage done to someone else’s property.
- Personal Injury Protection (PIP): This covers your own injuries as well as those of your passengers. This can often include money you lost because you had to take time off of work as a result of your injuries.
- Collision: With this coverage, the insurance company pays for damage to your car when you’re at fault in an accident.
- Comprehensive: This covers many other types of mishaps that damage your car, such as theft, fire, falling tree branches, weather, hitting a deer, and vandalism.
- Uninsured/Underinsured Motorist (UM/UIM): Despite the requirement to carry automobile insurance in most states, many drivers remain uninsured or underinsured. If you have UM/UIM coverage, it pays for your medical bills if the at-fault party doesn’t have enough or any insurance. The insurance company may then file a lawsuit against the uninsured driver to recoup those costs.
It’s a good idea to ask your automobile insurance carrier what’s covered under your plan before paying for damage yourself. Some plans even cover things like cracked windshields, pothole damage, car seats damaged in an accident, and pet injuries.
Minimum Coverage Requirements
Insurance policies generally cover different types of damage up to a certain amount. The liability limits are usually represented by a series of three numbers, such as 15/30/5. The first number is the amount the insurance will pay for each person’s bodily injuries ($15,000). The second number is the total in bodily injuries damages they will pay per accident ($30,000). And the third is the total they will pay for property damage ($5,000).
Each state sets its own minimum coverage requirements. States like Alaska and Maine have high minimums at 50/100/25, while others, like Florida, require much less coverage at 10/20/10. States also specify which types of insurance are mandatory. For example, in Oregon, you must have bodily injury and property damage liability coverage, personal injury protection, and both uninsured and underinsured motorist coverage. In many other states, like California and Texas, you only have to have bodily injury and property damage liability insurance.
Penalties for Having Inadequate Automobile Insurance
State laws also vary when it comes to penalties imposed for not having adequate insurance. Penalties include fines, traffic tickets, license suspension or revocation, vehicle impoundment, and even jail time. In Delaware, you could face a fine between $1,500 and $2,000, and the state could suspend your license and registration, and confiscate your license plates. In Georgia, you could spend up to a year in jail, aside from other consequences. Of course, all of these penalties are in addition to any damage or injuries you cause in an at-fault car accident. Without insurance, other drivers can sue you for damages which can ruin you financially.
Responsibilities of the Insurance Company
To deal with the problems and costs associated with uninsured and underinsured drivers, many states have laws requiring insurance companies to help enforce insurance requirements. For example, Arizona, Louisiana, New York, and many others require the insurer to notify the DMV or other agency when a policy is cancelled or not renewed. Some states, such as Virginia and Delaware, require the insurer to verify a person’s financial responsibility or insurance after an accident or arrest.
Additionally, some states have “no-fault insurance” laws which require your insurer to pay for your personal injuries up to the policy limit regardless of fault, except in certain circumstances. In these situations, if your insurance company fails to pay for reasonable and necessary medical expenses promptly, they could be ordered to pay even more in damages. Whether you live in a state with fault or no-fault laws, your insurance company has contractual obligations to you, and you may be able to file a lawsuit against them or other parties if your insurance claim is denied or doesn’t cover your damages.
Get Assistance with Your Automobile Insurance Issues
The costs of a car accident or driving while underinsured can be devastating. Whether you’re dealing with an uncooperative insurance company, an uninsured driver, or you’re being sued, an experienced insurance lawyer can guide you through the process and help protect your interests. Speak with a local attorney today to get started.
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