Consumer Alert
Many states require by law that a minimum level of liability insurance be carried by each person insuring a vehicle, in the absence of other proof of financial responsibility. The amounts required vary from state to state (see chart on page 115). However, if you have property of any significance or you earn wages that could be subject to attachment, you should carry more than the minimum to be sure you are adequately protected against liability. In such matters, to underinsure is being penny-wise and pound-foolish.
Property damage. The property damage aspect of the liability portion of an auto insurance policy pays for damages to another's property caused by negligent driving. Usually the damage is to another vehicle, but it doesn't have to be. For example, if you lose control of your car and crash into a fence, you would probably be responsible for the cost of repairing the fence—a legal burden you would transfer to your auto insurance company under the contract of insurance.
Like coverage for personal injury, the policy will provide for maximum benefits that the insurance company has to pay. Many states require a minimum amount of coverage, usually $10,000 or so. However, with the expense of vehicle repair today, the minimum usually isn't enough. Thus, you should probably add to the minimum coverage so that you are protected for at least $25,000.
Coverage for property damage, like personal injury in a fault state, is based on negligence. However, the extent of risk for property damage is far less than for personal injury, so the cost of the coverage is also far less.
It is interesting to note that over 50 percent of all insurance payouts are made for property damage and not for personal injuries. It is worth pointing out that insurance industry schemes to limit your rights to recover for personal injuries you have suffered in an auto accident leave untouched this important area of insurance company overhead. Could it be that the personal injury lawsuit crisis the insurance industry complains so bitterly about is really a mirage? We think so.
The cost of defense. To rewrite that great old rock 'n' roll standard, "there's a whole lot of suin' goin' on!" Sometimes people get sued when they didn't do anything wrong. Sometimes people who did make a mistake get sued for far more than the damage their negligence truly caused. And sometimes no one really knows who was at fault, so they sue each other.
This being so, a very important part of your auto liability policy is the company's obligation to pay for your defense should you get sued because of an accident or other incident covered by the policy. This cost of defense coverage can literally save you thousands of dollars since it includes high-priced items such as the cost of lawyers, specialists in accident reconstruction (if necessary), doctors who work for the defense, and other similar expenditures that are often needed to adequately defend an auto accident case. (Imagine the despair you would feel if you had to pay directly for all these. And imagine the corner-cutting you might do to save money if you had to pay for your own defense—corner-cutting that could cost you the lawsuit. The word bankruptcy could take on a new personal meaning.)
Medical Pay
As the name implies, the medical payments coverage in an auto insurance policy is designed to pay for some of the medical consequences that can result from an accident. Unlike the liability portion of the insurance policy, "med pay" has no relationship to fault but will pay benefits to eligible beneficiaries for the cost of medical care and funeral expenses up to the policy limits.
Who gets benefits under med pay. Two classes of persons are entitled to receive benefits under med pay:
The insured and family members who live in the same household. Thus, if you run a red light and cause an accident, your insurance will protect you against the financial consequences of your negligence, while at the same time the med pay portion of the policy will pay for the treatment of your injuries, up to the extent of coverage.
An insured and covered family are also protected under med pay if they are hit as pedestrians by a vehicle intended to be driven on public roads, regardless of who caused the accident. This "no-fault" aspect of med pay coverage can be important, since you don't have to wait until the matter is resolved in court to receive benefits—which in some states can take years.
Any passenger injured while in the "covered vehicle". Regardless of who is at fault in the accident, your passengers are entitled to receive payment for medical expenses caused by the accident —again, up to the maximum amount provided in the policy. The key phrase here is "covered vehicle," or the car listed in your policy. Thus, if you are driving someone else's car, your med pay would not coyer the accident injuries of a passenger. That would be up to the med pay portion of the car owner's policy.
Most people elect not to take out large amounts of med pay since they are usually covered by some form of health insurance and there could be duplicate coverage. However, med pay will cover one thing that health insurance will not: funeral expenses. Since the price of med pay is relatively small, it is a good idea to have at least a few thousand dollars in coverage.
Now, take a look at the typical auto insurance declarations page shown opposite. If you do purchase med pay, the declarations page will tell you how much you are selecting. Did you know that the limit of coverage is not necessarily the maximum your company could have to pay? That's because, unlike liability coverage, the med pay policy limits do not refer to the total coverage available, but rather to the total that can be collected by each covered injured individual. Thus, if three people are seriously injured in an accident where the owner/driver of the car had $2,000 in med pay coverage, the insurance company could be on the hook for $6,000 under the med pay clause.
It is noteworthy that your auto insurance company will try to restrict you—and properly so—from receiving a double benefit from them. Thus, if your company pays for covered injuries out of the med pay portion of the policy, it will not pay the same bills under the liability section and will be permitted to deduct those payments from the final award.
Knoxville car accident attorneys Car accident lawyers in Knoxville TN , Gilreath and Associates represents clients involved in auto accidents in Bristol TN and Knoxville Tennessee.