What You Need to Know About Auto Insurance

Every time you turn on the television you are bombarded with advertisements telling you that “fifteen minutes can save you some odd amount of money on car insurance.”  Most of these direct you to a website that allows you to fill out your own form for insurance.  Doing so usually saves you money because you are not using an agent as a “middle man” to sell you a policy.  But what do all those terms mean?  Do you need medical coverage if you have health insurance, and how much coverage do I need?  Does insurance provide coverage for the person or the car?  This web log entry attempts to clarify all these terms to make you are more aware consumer regarding car insurance and how important that is you are involved in an automobile accident.

 

How does auto insurance work; am I covered or is it my car?

 

The short answer is that your car is covered.  Basically, when you purchase insurance you purchase it based on your vehicle and driving record, but its is the vehicle that insured, not you.  So, for instance, if you borrow your friend’s car and get in an accident, his insurance pays.  The only time your insurance would become active is if your friend’s policy did not cover the total damages, or was uninsured for the accident.  So be careful when lending your car ,because if it is involve in an “at fault” accident, it’s your insurance that pays and you face increased premiums as a result.

 

What types of insurance coverage are there and what do I need?

 

Liability coverage is the cheapest coverage and is required of all vehicles on the road.  Liability covers only the property and bodily injury of another and provides no coverage for you or your vehicle.  If you finance or lease your vehicle you will be required to provide the following types of insurance:

Comprehensive insurance is a type of coverage that will pay for repairs or replacement of your vehicle if it is not in a collision.  It covers things such as fire, vandalism, natural disasters such as hail, or theft.  It is not a mandatory coverage by law, but if you have a loan or lease your vehicle it may be required.

Collision insurance is a type of coverage that will pay to repair or replace your vehicle if it is damaged by another vehicle or object.  It does not provide for medical payments or damage to another vehicle.  It also does not confer damage to your vehicle no related to driving (see comprehensive coverage.

 

What if the another driver causes and accident and doesn’t have insurance?

 

You can protect against uninsured or underinsured motorists by purchasing uninsured motorist coverage.  In the State of South Dakota, your insurance coverage will take the place of an uninsured motorist and cover you in the event you are in an accident caused by someone without insurance.  Similarly, if a motorist is underinsured, the legal limit of liability coverage in South Dakota is only $25,000, your insurance will take the place of an underinsured’s coverage and protect you.

 

How much coverage should I buy?

 

As was just stated, the legal limit for liability insurance in South Dakota is $25,000 per person and property as well as $50,000 for multiple persons; however, if you finance or lease your vehicle, the lessor or bank will most likely dictate that you must have $100,000/$300,000 comprehensive and collision to cover their losses should you be involved in an accident.  One important thing to remember is that if the amount of damage exceeds the limits to you policy, you can be held personally responsible for the remainder.  Given the high cost of medical care, it is advisable to have as much insurance as you can afford.  Higher dollar insurance policies are often times not much more than standard coverage, so it’s important to look at more insurance when making a decision on how much to buy.

 

What about medical payments coverage or med pay?

 

Payments for medical coverage are offered as an al la carte option for your policy.  It can be confusing because you probably have medical insurance so why would you want med pay?  Medical payments insurance will pay for your medical bills if you are in an accident and the at-fault’s company is withholding payments until your claim is complete.  So, if you have out of pocket expenses in the meantime, you are responsible for making those payments.  Given that, in South Dakota, a claim for bodily injury must be filed within 3 years, those amounts, even with co-pays and deductibles from your health insurance, can really add up!

 

Buying automobile insurance can be very confusing and using an agent is advisable.  However, with more and more companies encouraging people to buy direct in order to save money, it is important that you understand how insurance works and what type and amount to buy.  If you find yourself in an accident and need advice on your policy or how to proceed if you have been injured, call the attorneys at Wilka and Welter for a no cost consultation regarding your claim.

Posted in Wilka, Welter & Ash LLP Law Blog.