Types of Coverage
An auto insurance policy, whether in a fault or no-fault state, is really a combination of several different coverages tied up in one package. Some of these coverages protect third parties and some protect the insured directly. Some of the coverages are mandatory and some optional. The differing coverages are priced separately and added together to come up with the total premium cost.
Liability Coverage
The issue of liability insurance is the most controversial aspect of auto insurance and the most expensive to purchase. Liability insurance is designed to protect you against the costs of being sued should your or another insured's negligent driving cause injury.
Without sounding too much like the lawyers we are, negligent driving can be defined as driving outside the standard of care required of the operators of an automobile. What constitutes driving beyond the standard of care will depend on each state's individual laws. A good universal example would be running a red light.
Negligence requires more than the "mere" act of driving badly. In order for liability to arise there must also be some form of actual harm, called damages, which directly result from the bad driving. In other words, under the "no harm, no foul" principle, if you run a red light and get away with it without incident, you will not be subject to liability to anyone. However, if you run a red light and hit someone, you can be held liable for all of the monetary damages allowed by law that result from your negligence.
An auto insurance policy addresses three separate aspects of this liability; bodily injury, property damage, and the cost of defending a lawsuit.
Bodily injury. If your driving negligence causes the injury or death of another, you must pay the monetary damages that result from the accident. This includes medical bills, lost wages, and money to compensate the victim for pain and suffering (in fault states) that result from the injury. In some cases, you can also be held responsible for damages that the injury to one person causes to others. For example, if the injured person is killed, you can be held responsible to the deceased's spouse and children for loss of the support they would have received had the person lived. You can also be sued for something called loss of consortium if the injuries prevent a spouse from enjoying the "comforts of the marital bed."
When you purchase liability insurance as part of an auto insurance policy, you have the power to choose how much protection from liability you want to buy. This liability coverage will be expressed in terms of a single-limit amount or a split-limit amount.
Split-limit liability packages are the kind the majority of people purchase. The risk accepted by the insurance company is expressed in terms of the maximum amount that will be paid under the policy per injured person and per accident for all injured persons. A typical example is $100,000 per person and $300,000 per accident.
A single-limit policy will not limit the amount payable to an individual but only per accident—for example, $300,000 per accident.
The distinction can be important. Assume that you rear-end a car full of people. Five people are injured. However, only one person is seriously hurt while the other four suffer minor injuries. Assume that the seriously injured person incurs $80,000 in medical bills and loses $50,000 in wages because of the injuries. The total damages, without pain and suffering, are already $ 130,000. Add pain and suffering and the potential loss of future health and earning capacity, and you could be facing $500,000 or more in liability.
Under a split-limit type of coverage, the most the severely injured person could be paid under your liability insurance would be what is called the policy limits—$100,000 in our example.
You could be forced to pay the difference out of your own pocket if the injured person (or his or her lawyer) decides to pursue you in court. Under a single-limit policy, however, you would have less to worry about because your insurance would be more productive. Most of your liability coverage could be applied to the seriously injured party, $300,000 in our example, which the victim might be willing to accept as payment in full. At the very least, the amount you could be forced to take out of your own wallet would be significantly less than under the split-limit format.
Liability policies are sold in states that have a fault system of redressing damages caused by auto accidents as well as in no-fault states, which modify this aspect of the auto insurance.
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.