A Breakdown of Each Coverage on Your Policy
Chances are if you look at your Massachusetts auto policy and don’t understand what the coverage amounts mean, you are not alone. However, you should familiarize yourself with your coverage so you can determine if you have enough financial protection. So get out your policy and follow along as I describe what each coverage means below.
Part 1. Bodily Injury to Others.
This pays for medical expenses and other damages to anyone injured or killed by your car. This required amount is $20,000 per person and $40,000 per accident (max). Meaning, the total amount paid out to the people you hit is $40,000 combined ($20,000 for 1 person, $10,000 for 2 other people, or $10,000 for 4 people, etc). This only covers accidents in Massachusetts.
Part 2. Personal Injury Protection (PIP).
Pays up to $8,000 in medical expenses for you or anyone who is driving your car (legally) during an accident. It also covers any passengers or pedestrians for medical expenses once the individual’s own health care expenses reach $2,000.
Part 3. Bodily Injury Caused by an Uninsured Auto.
Protects the driver and passengers (unless covered by their own auto policy) against medical expenses caused by an uninsured or unidentified driver. This covers any “hit & run.” The minimum limit required is $20,000 per person and $40,000 per accident. Recommended Amount: $100,000/$300,000
Part 4. Damage to Someone Else’s Property.
This amount pays for damage you cause to another person’s property such as an automobile or building. The minimum limit is $5,000. Recommended Amount: $100,000
Part 5. Optional Bodily Injury to Others.
This optional amount is added onto the Part 1 minimum of 20K/40K to extend your liability against injury to others. This coverage also protects you against damages suffered by guests in your car during the accident. This covers accidents in the entire United States and Canada. Chances are, if you get into a serious accident, you will owe more than $20,000 per person and $40,000 total, leaving you on the hook for the difference. Recommended Amount: $250,000/$500,000 or $100,000/$300,000
Part 6. Medical Payments.
Medical expenses for you and your passengers over and above the amounts covered by Part 2, no matter who is at fault in the accident. Recommended Amount: $5,000
Part 7. Collision.
Collision coverage pays for the damages to your car when involved in an accident, regardless of fault. You may need to pay the deductible. Recommended Amount: $500
Selecting Your Deductible.
The deductible set under Part 7 and Part 9 is your choice. The standard deductible is $500. You can save on your premium by selecting a $1,000 deductible. This is the amount you will have to pay in the event of an accident which is your fault or if the other driver is unidentified (“hit & run”).
Waiver of Deductible.
Having a “Waiver of deductible” means that you will not need to pay the deductible if the accident is caused by another driver that is identified.
Part 8. Limited Collision.
This coverage is for people who do not wish to carry full Collision coverage, Part 7, but still want to be covered if they are hit by an identified driver who was at fault. If you are at fault, you will not be covered. Recommended Amount: Get full Part 7 Collision
Part 9. Comprehensive.
Pays for damage to your vehicle resulting from non-collision events such as theft, fire, striking an animal, or falling tree damage. You will be responsible for the deductible. Recommended Amount: $500
Part 10. Substitute Transportation.
Reimbursement for a car rental or transportation while your vehicle is being repaired (after a breakdown or accident). You will receive a daily stipend and total stipend that cannot be exceeded. Options are $15 a day up to $450 (30/900. 45/1350. 1000/3000). Recommended Amount: 15/450 if you have AAA. 30/900 if you do not have AAA.
Part 11. Towing and Labor.
Pays up to a certain amount to get your car towed from the accident/breakdown scene or fixed at the scene (parts not included) so it runs again. Options are $50, $100, $150. Recommended Amount: $100
Part 12. Bodily Injury Caused by an Underinsured Auto.
Protects the driver and passengers (unless covered by their own auto policy) against medical expenses caused by an underinsured driver. The accident must be caused by someone without enough bodily injury coverages (Part 1 & Part 5). Recommended Amount: $100,000/$300,000
If you do not have any of the recommended coverage amounts above, you are putting yourself at financial risk every time you get behind the wheel. It may be time to have your policy quoted with the proper amounts. Send us a copy of your policy today, and we will quote it with several different carriers, ensuring you get the best product at the best price. Go to our website www.agordon.com for more insurance resources. Learn more about your auto insurance options here.
Read another staff member's article Property Damage for Auto Insurance: Should I Increase My Limit?