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Three Questions to Ask your Insurance Agent About Auto Coverage

How much automobile insurance should you carry?  As is often in life, my response is “it depends.”  The answer to the “how much” question will vary, depending on the person asking the question.  However, there are a few aspects of obtaining automobile insurance that can be categorized as a bright line rule.

Question 1: What is my minimum coverage?

The first rule of automobile insurance is that you need to purchase at least some insurance.  It is the law in Texas, among most other states.  In Texas, all individuals are required to carry 30/60/25 in automobile insurance coverage.  The “30” is $30,000 per person, meaning that this type of coverage provides up to $30,000 in insurance coverage for any person you injure as a result of your mistake.  The “60” refers to $60,000 per accident, which means that your coverage provides insurance for up to $60,000 per accident that you cause.  This means that if you were to cause an accident that injured 5 people, your insurance company would only be responsible for paying a maximum of $30,000 to an injured individual and $60,000 total to all injured individuals.  In the example above, even if all five individuals had serious injuries, your insurance policy would only cover a maximum of $60,000 in total damages.  The “25” is $25,000 in property damage (other cars, houses, traffic devices) insurance for any property damage you may cause in an accident.

This raises an important question, what happens to you if you don’t have enough insurance to cover the damages caused in an accident.  The simple answer is that you are personally responsible for any damages that you cause that are above and beyond your insurance policy limits.  In the above example, if you had a 30/60/25 policy and you seriously injured 5 people in an accident at a rate of $30,000 per person, then your insurance would cover the first $60,000 and you would have to pay the last $90,000.  That is why it is important to be adequately insured.

Question 2: Do I have Uninsured/Underinsured Motorist Coverage?

The second rule of automobile insurance is to carry what is called “UM” coverage, which is optional.  “UM” is an abbreviation for uninsured or underinsured insurance coverage.  There are many people driving that have no insurance or very little insurance coverage.  If you are injured by one of those people, it is important that you have UM coverage.  In accidents where you are injured by someone with little or no insurance, your own policy would pay for your damages, up to your policy limit.  For example, if you were injured by an uninsured driver and you had purchased UM coverage with limits of 30/60, then your insurance company would compensate you up to $30,000 per person and $60,000 per accident.  However, UM coverage is optional but it should always be purchased.  Further, UM insurance coverage must be purchased at the same limits as your liability insurance; if you have 30/60/25 liability limits, then you have to have the same limits of UM coverage.

Question 3: Should I get Personal Injury Protection (PIP)?

The last rule of purchasing insurance is to buy Personal Injury Protection, also known as PIP insurance.  PIP is a no-fault coverage that will provide payments towards medical bills and lost wages in the event you are injured and/or unable to work after being in an auto accident - regardless if the accident is your fault or another driver's.  The coverage starts at $2,500 and usually goes up to $5,000, $10,000 and even up to $25,000.  In our experience, PIP is the most beneficial coverage.

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