Think you are fully covered if ever you are in a car accident? Think again. There is no such thing as “full coverage”auto insurance in Pennsylvania or New Jersey; that term is actually a misnomer. Many drivers think that because they purchased a little extra coverage or because they have “comprehensive” coverage that they are fully covered for any type of accident or loss. But this is simply not the case.
Auto insurance is a complicated topic. There mere mention of it makes many folks’ eyes glaze over. Do you know what types of insurance are required by law, what types of optional coverages are available and what your policy will actually pay if you’re ever involved in an accident? If your answer is no, then you’re not alone. Many of our clients who come to us after an accident don’t have a clue as to what their policy entails and are completely blindsided when they realize their insurance falls far short of their needs.
In this article, we hope to shed some light on the topic. We will attempt to demystify auto insurance coverage and empower you with the knowledge to make the right decisions and protect yourself and your family.
Minimum Auto Coverages in Pennsylvania and New Jersey
The law requires that everyone who owns a vehicle prove that they are financially responsible enough to pay for damages if ever they in an accident. Most often, drivers prove their financial responsibility by purchasing auto insurance. Each state sets its own standards for auto insurance coverage and provides the rules for minimum coverage. Purchasing minimum coverage will ensure that you meet legal requirements, but it doesn’t mean you’re “fully covered,” and it doesn’t pay for many of your needs if ever you’re in an accident.
Pennsylvania requires three basic types of coverage.
- Medical benefits – This type of coverage pays your and your family’s medical bills, regardless of fault. You have to purchase at least $5,000 of coverage.
- Bodily injury liability – You also must carry a minimum of $15,000 per person/$30,000 per accident bodily injury liability coverage. This pays for others’ medical bills and other damages when you’re at fault.
- Property damage liability – This coverage pays for others’ property damage when you’re at fault. The minimum amount you can carry is $5,000.
New Jersey provides an option for bare-bones insurance, which the state refers to as a “basic policy.” This is the most inexpensive option, but it hardly covers anything. Bodily injury liability is not required, which means if you don’t carry it and injure others, you’ll be responsible for paying their damages out of pocket. The only two coverages required in NJ include the following:
- Personal injury protection – Personal injury protection, or PIP, is akin to Pennsylvania’s medical benefits. It covers your and your passengers’ injuries in an accident, regardless of fault. The minimum coverage is $15,000 per person.
- Property damage liability – You have to carry at least $5,000 in property damage.
Optional Coverages to Consider
You can imagine why the state minimum coverages will not be much help if ever you are involved in a serious accident. For example, $5,000 in medical benefits will hardly scratch the surface of a hospital bill for even semi-serious injuries. Also, most cars are valued at way more than the property damage liability limit of $5,000. If you total a newer car, you will be out of luck.
You will want to consider increasing policy limits on the basic coverages you carry. Doing so will increase your premium only by a few dollars, and you will be glad you have it if you are in a bad accident. If you reside in NJ, you will want to opt for a standard rather than basic policy and ensure you purchase bodily injury liability.
There are a staggering number of auto coverages and add-ons you might want to consider, such as income loss, funeral benefits, accidental death benefits, gap coverage and rental reimbursement, to name a few. So as not to overwhelm you, below is a brief description of the four types of important coverages that can provide the most overarching protection.
- Uninsured/underinsured motorist coverage – UM/UIM covers you if you are in an accident with someone who doesn’t have adequate insurance to pay for your damages or who is driving illegally without any insurance at all. It also covers you if you are the victim of a hit-and-run. Given the scores of people who drive with little insurance, the value of UM/UIM cannot be overstated.
- Collision – Collision coverages pays for vehicle damages. If you do not carry collision, you will have to foot the bill for any repairs to your car if you’re at fault in an accident.
- Comprehensive – Comprehensive coverage pays for damage to your car that is not the result of an accident, such as in the case of theft, flooding or vandalism. Most auto finance companies require that you carry collision and comprehensive insurance during the interim of your loan.
- Tort coverage – You will want to ask your agent about purchasing full or limited tort coverage. This coverage gives you the right to sue at-fault parties in lieu of filing a claim, an option that potentially enables you to recover more damages.
Preempting Problems Before an Accident Occurs
Knowledge is power. Learning the basics about auto insurance and finding coverages that meet your needs is the best way to protect yourself from disappointment (and financial ruin).
You should schedule an appointment with your insurance agent to review your policy. Your agent will be able to explain what’s available and what coverages will suit your needs and your budget. Keep in mind, you have the right to shop around to find the best prices on premiums, so do not feel pressured to make decisions on the spot.
There are a couple of good, unbiased resources that you might find helpful when looking at auto insurance options.
- The Pennsylvania Insurance Department’s free, downloadable Automobile Insurance Guide
- The New Jersey Department of Banking and Insurance’s free booklet, Everything You Wanted to Know about Auto Insurance but Were Afraid to Ask and its New Jersey Auto Insurance Buyer’s Guide
- Cordisco & Saile’s free report, Don’t Crash Again! A Car Accident Victim’s Guide To Maximizing Recovery
While having good coverage can help after an accident, you should still talk to a lawyer if you’re ever in one. For legal help in PA or NJ, contact Cordisco & Saile LLC at 215-791-8272.