When considering coverage for auto insurance, it is important to properly cover yourself, your household members, and your vehicle(s). However, it is just as important to purchase enough coverage were you to cause damage to others or to their property.
Where is this mentioned?
Part 4 (damage to someone else’s property) provides the coverage for damage to property owned by others, whether it is another vehicle or a structure, such as a fence, mailbox, building, etc. This would also apply to structures such as guardrails on the highway, telephone poles or structures owned by National Grid. Payment will be made if the insured or a household member is legally responsible for the accident. The insurance carrier will also pay if someone else was using your car with your consent and is legally responsible for the accident.
How much will be paid?
The most that will be paid for damage from any one accident is shown on the coverage selections page. If someone covered under this part is using an auto he or she does not own at the time of the accident, the owner’s auto insurance must pay its limit before the operator’s policy will pay. The operator’s policy will pay for their share of any damages not paid by the owner’s insurance (if damages exceeded their limit) up to the operator’s policy limit.
Is coverage mandatory?
Part 4 is compulsory insurance and $5,000 limits are the minimum allowed by the state. Higher limits may be purchased and the cost to increase is usually much less than expected. One of our insureds recently increased their Part 4 from $50,000 to $100,000 for 2 vehicles and the annual total premium increased by $2. Another insured increased their Part 4 from $100,000 to $200,000 for 3 vehicles and the total annual premium increased $11. It is definitely in an insured’s best interest to have higher limits quoted as one should try to protect one’s assets from potential lawsuits.
What’s an example of needing coverage?
As an example of what can happen when inadequate limits are purchased, another agent’s customer called us recently to ask us for confirmation of the facts surrounding an accident she had had the year before. She was a youthful operator whose father purchased the insurance for her with minimum state limits. His decision was based on the fact that she worked part-time and didn’t own anything. However, she was involved in an at fault accident and totalled someone else’s vehicle. She was found legally responsible, her policy paid the $5000 minimum limit purchased and her future wages were attached for the remaining balance of $30,000 owed for the totaled vehicle. We advised that this was in fact how all carriers would have treated the loss when only the minimum state limits had been purchased.
We always recommend that our customers consider their assets and purchase enough coverage to protect themselves and their property. Check out our auto insurance page if you're ready for a quote or learn more with our insurance resources and whiteboard videos.
Learn more about your auto insurance options here, and read a staff member's blog about property damage for auto insurance here.