“AUTOMOBILE INSURANCE 101”
(You’d be surprised at the responses I get… some even include sex, but what about sex don’t you understand? I’ll leave that for another column….)
Some folks get it, others are just stymied.
It’s true though, most folks hate to pay for insurance because they’re not buying something tangible, like a car, or a piece of clothing, or furniture; That… they can understand! But the concept of “buying piece of mind” is not something that’s readily understood.
When purchasing coverages, work with YOUR agent and try to look at your whole picture; home, autos, business, IRA’s, bank accounts, retirement etc…. if possible figure out what you’ve got to lose if someone gets a judgment against you; and purchase your insurance coverage limits accordingly.
Purchase as much liability as you can afford, and as much as the law will allow is a good concept; but not one that’s always feasible. Finances seem to get in the way here…. but try not to leave your ass and your assets out there swinging in the breeze.
There are 12 coverages on the Mass Auto policy and it might seem very intimidating if you don’t have any insurance savvy…. but even though there are 12 coverages and they each work independently of each other, remember this….
- There are basically only two types of auto coverage:
- Bodily Injury and Property Damage
Hopefully knowing that will make the rest of the reading a bit easier!
BEFORE I EMBARK UPON COVERAGE, PLEASE LET ME REMIND YOU THAT GUEST COVERAGE IS AUTOMATICALLY INCLUDED WHEN YOU PURCHASE OPTIONAL BODILY INJURY LIMITS OF LIABILITY, THAT DIFFERS FROM THE MOTORCYCLE INSURANCE POLICY. ON THAT POLICY, YOU HAVE TO REQUEST THAT COVERAGE.
- COVERAGE #1 IS COMPULSORY IN MASSACHUSETTS WITH LIMITS OF $20000 PER PERSON AND $40000 PER ACCIDENT. THIS COVERAGE DOES NOT COVER YOU ON PRIVATE WAYS OR ON ROADS OUT OF MASSACHUSETTS OR INCLUDE YOUR PASSENGERS; AND YOU’RE NOT ABLE TO INCREASE THE LIMIT TO PROTECT YOUR ASSETS. (THESE COVERAGES CAN BE BOUGHT UNDER OPTIONAL BODILY INJURY PART #5)
- COVERAGE #2; PERSONAL INJURY PROTECTION, HEREAFTER KNOWN AS PIP; THE LIMIT IS $8000, AND WILL COVER, 75% OF LOST WAGES, HOME HEALTH AIDES, AND/OR MEDICAL PAYMENTS. THE FIRST $2000 IS PICKED UP BY YOUR AUTO POLICY, ANYTHING AFTER THAT IS SENT TO YOUR HEALTH CARRIER. GENERALLY, THE HEALTH CARRIER SHIPS IT BACK TO THE AUTO CARRIER FOR PAYMENT. IT’S RECOMMENDED THAT YOU OPT TO TAKE MEDICAL PAYMENTS, BECAUSE IT’S A “NO FAULT” COVERAGE, AND WILL PICK UP WHERE PIP LEAVES OFF, ALTHOUGH, UNLIKE PIP, IT’S USED ONLY FOR MEDICAL PAYMENTS.
(MOTORCYCLE INSURANCE DIFFERS IN THE RESPECT THAT THERE IS NO PIP COVERAGE WHILE YOU ARE ON YOUR BIKE. MEANING THAT, YES, EVEN WHILE YOU’RE STOPPED AND NOT MOVING; YOU ARE NOT COVERED UNDER THE PIP PORTION OF THE POLICY. YOU ARE HOWEVER, COVERED IF YOU ARE STANDING BESIDE YOUR BIKE AND SOMEONE KNOCKS THE BIKE OVER ON YOU. YOU’LL NOTE THAT THE PREMIUM CHARGED FOR THIS COVERAGE IS MINIMAL, UNLIKE THE ONE CHARGED FOR YOUR AUTO INSURANCE.)
- COVERAGE #3 IS LIABILITY COVERAGE FOR UNINSURED AUTOMOBILISTS, WITH A COMPULSORY LIMIT OF $20000/$40000. UNLIKE # 1, YOU’RE ALLOWED TO INCREASE THIS COVERAGE TO THE LIMIT YOU REQUIRE. I RECOMMEND YOU BUY AS MUCH AS YOU CAN AFFORD, AND THE STATE WILL ALLOW WITH LIMITS OF AT LEAST $100000 PER PERSON $300000 PER ACCIDENT; AND STRONGLY SUGGEST LIMITS OF $250000 PER PERSON $500000 PER ACCIDENT. THE COST TO INCREASE IS NOT EXORBITANT. THIS COVERAGE WILL COVER YOU IN THE EVENT OF A LOSS WHERE BODILY INJURY IS INVOLVED. IF THE OTHER PARTY HAS NO COVERAGE, YOU WILL HAVE NOWHERE TO GO TO RECUPERATE YOUR LOSS; UNLESS YOU PURCHASE THE LIMITS HERE.
- COVERAGE #4; IS PROPERTY DAMAGE. THE STATUTORY LIMIT MANDATED BY THE STATE IS $5000. NOW THAT CERTAINLY IS AN INSUFFICIENT LIMIT TODAY, AS YOU CAN’T REPLACE A CAR FOR THAT AMOUNT! I STRONGLY RECOMMEND THAT YOU PURCHASE AT LEAST $100000, AND MORE IF YOU CAN AFFORD IT, AND GET IT. THIS COVERAGE WILL PAY FOR DAMAGES YOU CAUSE TO OTHER PEOPLE’S PROPERTY; BE IT THEIR HOUSE, THEIR CAR, THEIR BIKE, THE CITY STREET-SIGN, ETC. IF YOU ARE THE LAST AUTO IN A PILEUP, YOU COULD BE HELD RESPONSIBLE FOR THE DAMAGE TO ALL THE OTHER VEHICLES; WHICH COULD MOUNT UP RATHER QUICKLY. THE COST TO INCREASE IS MINIMAL AND WELL WORTH THE EXPENSE. IF YOU DON’T INCREASE THIS LIMIT, YOU WILL BE RESPONSIBLE TO PAY FOR THESE DAMAGES OUT OF POCKET. THAT COULD FINANCIALLY RUIN YOU, AND WHAT; FOR $5.00 MORE A YEAR, YOU CAN INCREASE THE COVERAGE TO $100,000.
- COVERAGE #5 IS OPTIONAL BODILY INJURY AND WILL COVER BODILY INJURY YOU INCUR TO OTHERS. AS IN #3, BUY AS MUCH AS YOU CAN AFFORD, AND THE STATE WILL ALLOW AS THIS COVERAGE IS THE PART THAT RESPONDS IN THE EVENT OF A LAWSUIT. PROTECT YOUR ASSETS AND MAKE SURE YOU DON’T HAVE TO LIQUIDATE THEM TO SATISFY A CLAIM. LIMITS OF $250,000 PER PERSON $500,000 PER ACCIDENT IS A NICE PLACE TO START THESE DAYS; AND THE COST ANNUALLY IS NOT PROHIBITIVE.
MEDICAL PAYMENTS, WORKS IN CONJUNCTION WITH “PIP” COVERAGE, OR COULD WORK STAND ALONE. IT IS THE ONLY “NO-FAULT” COVERAGE WE HAVE LEFT. BY THAT I MEAN, THAT, IF FOR INSTANCE YOU CLOSE THE DOOR ON YOUR HAND AND REQUIRE MEDICAL ATTENTION, YOU CAN JUST SEND THE BILL TO THE COMPANY, AND THEY WILL PAY IT UP TO THE LIMIT YOU’VE CHOSEN. PLEASE REMEMBER THESE LIMITS WILL BE SHARED WITH YOUR PASSENGERS; AND POSSIBLY NOT PICKED UP BY YOUR HEALTH CARRIER.
- COVERAGE # 7, COLLISION WILL COVER YOUR BIKE IN THE EVENT OF A “CRASH” OR COLLISION. TO KEEP THE COST DOWN, I SUGGEST ENTERTAINING A HIGHER DEDUCTIBLE OF $1000 (ALWAYS ELECT TO TAKE THE WAIVER SO YOU CAN RECUPERATE YOUR DEDUCTIBLE SHOULD THE ACCIDENT NOT BE YOUR FAULT AND YOU HAVE THE OTHER PARTY’S INFORMATION.) SELECTION OF A HIGHER DEDUCTIBLE WILL SAVE YOU SOME MONEY; THIS MAKES SENSE FOR THOSE HIGHER VALUED AUTOMOBILES. IF COST IS NOT A CONCERN, BUY A LOWER DEDUCTIBLE. THIS COVERAGE IS WRITTEN AT ACTUAL CASH VALUE; MEANING THAT DEPRECIATION IS FACTORED IN AT THE TIME OF A LOSS. IF YOU’VE CUSTOMIZED YOUR VEHICLE AT ALL, OR ADDED SPECIALIZED SENDING OR RECEIVING EQUIPMENT, FAILURE TO NOTIFY YOUR AGENT OF INSTALLATION OF THESE ITEMS COULD RESULT IN THEIR NOT BEING COVERED IN A LOSS.
*** A SIDE-NOTE HERE, THAT “CARCO” OR “CHECKPOINT” INSPECTIONS ARE REQUIRED BY COMPANIES, IF YOU WANT TO RETAIN THE PHYSICAL DAMAGE COVERAGE ON YOUR VEHICLE. FAILURE TO COMPLETE ONE OF THESE FORMS IN THE TIME ALLOTTED WILL RESULT IN THE COMPANY’S REMOVAL OF THE COVERAGE.
FOR OUR CUSTOMER’S CONVENIENCE, WE PERFORM THE INSPECTIONS AT OUR OFFICE.
LIMITED COLLISION WORKS SIMILARLY TO FULL COLLISION, ONLY, YOU’RE ONLY COVERED IF YOU KNOW WHO HIT YOU, AND THEY’RE AT FAULT. IF YOU DON’T KNOW WHO HIT YOU, YOU’RE OUT OF LUCK, AND THERE’S NO COVERAGE. THIS COVERAGE IS RATHER INEXPENSIVE BY VIRTUE OF THE FACT THAT IT’S SO LIMITED, AND IS BEST SOLD WITH NO DEDUCTIBLE. (IT IS THE ONLY PHYSICAL DAMAGE COVERAGE SOLD WITHOUT A DEDUCTIBLE)
- COVERAGE # 9, COMPREHENSIVE IS FIRE AND THEFT, VANDALISM, AND GLASS COVERAGE. THIS COVERAGE IS ALWAYS SOLD WITH A DEDUCTIBLE, AND BE REMINDED THAT UNLIKE COLLISION THERE IS NO RECUPERATING THE DEDUCTIBLE ON COMPREHENSIVE. THE COST TO ELECT A HIGHER DEDUCTIBLE IS NOT AS MONEY SAVING AS COLLISION; BUT IN SOME CASES FOR HIGHER VALUED VEHICLE IT’S WELL WORTH IT. IT’S NOT RECOMMENDED TO ELECT TO TAKE A GLASS DEDUCTIBLE AS THE SAVINGS IS ONLY ABOUT $12.00 A YEAR, AND THE MINIMUM GLASS DEDUCTIBLE IS $100.00. ALSO, UNDER COMPREHENSIVE YOU WILL BE ABLE TO RENT A VEHICLE AFTER 48 HOURS, IF THE VEHICLE IS STOLEN AND NOT RECOVERED. HOWEVER, YOU MUST GET AUTHORIZATION FROM YOUR CARRIER TO DO THIS.
*****COVERAGE IS WRITTEN AT ACTUAL CASH VALUE, BUT, IT IS POSSIBLE TO WRITE THE COVERAGE AT “STATED VALUE”; WHICH MEANS YOU WILL BE ABLE TO RECUPERATE THE FUNDS YOU’VE SPENT ON UPGRADES TO YOUR VEHICLE; BUT YOU WILL NEED AN UP TO DATE APPRAISAL FROM A LICENSED APPRAISER TO BE ELIGIBLE FOR STATED VALUE. (A LIST OF LICENSED APPRAISERS IS ELSEWHERE ON THIS WEBSITE AT APPRAISERS PAGE.)
- COVERAGE #10 IS RENTAL, AND THERE ARE SEVERAL LIMITS AVAILABLE. THIS COVERAGE MAY BE USED WHEN YOUR VEHICLE IS IN THE SHOP DUE TO AN ACCIDENT OF A COMPREHENSIVE LOSS; YOU ARE NOT ABLE TO USE IT FOR MECHANICAL BREAKDOWN, SORRY! ANOTHER NOTE HERE, WHEN YOU’RE ON VACATION AND RENT A VEHICLE, YOUR LIMITS OF LIABILITY TO INCLUDE THE PHYSICAL DAMAGE WILL CARRY OVER TO THE RENTAL. CERTAIN CREDIT CARDS WILL PICK UP PHYSICAL DAMAGE WAIVERS, SO CHECK WITH THE PARTICULAR CARD BEFORE PURCHASING COVERAGE FROM THE RENTAL COMPANY.
- COVERAGE #11 ISAN OPTIONAL COVERAGE, TOWING; AND THERE ARE SEVERAL LIMITS AVAILABLE. THIS WILL COVER YOU IF YOU HAVE TO BE TOWED TO A SHOP OR HOME DUE TO MECHANICAL BREAKDOWN, AND WILL ALSO COVER ROADSIDE SERVICE CALLS FOR BREAKDOWNS UP TO THE LIMIT PURCHASED. IT WILL NOT COVER YOU, SHOULD YOU BE ILLEGALLY PARKED AND TOWED! IF YOU HAVE ROADSIDE SERVICE THROUGH A GAS CARD OR AAA, IT MAY NOT BE NECESSARY TO PURCHASE THIS COVERAGE
- COVERAGE #12 IS LIABILITY COVERAGE FOR UNDERINSURED AUTOMOBILISTS, AND AGAIN I RECOMMEND YOU BUY AS MUCH AS YOU CAN AFFORD, AND THE STATE WILL ALLOW WITH LIMITS OF AT LEAST $100000 PER PERSON $300000 PER ACCIDENT; AND STRONGLY SUGGEST LIMITS OF $250000 PER PERSON $500000 PER ACCIDENT. THE COST TO INCREASE IS NOT EXORBITANT. THIS COVERAGE WILL COVER YOU IN THE EVENT OF A LOSS WHERE BODILY INJURY IS INVOLVED. IF THE OTHER PARTY HAS STATUTORY LIMITS OF $20000 PER PERSON $40000 PER ACCIDENT, AND YOU CARRY THE SAME, YOU WILL HAVE NOWHERE TO GO TO RECUPERATE YOUR LOSS; AS THERE IS NO STACKING OF COVERAGE IN MASSACHUSETTS.
REMEMBER; PROTECT YOUR ASS AND YOUR ASSETS!!
AND, THAT MY FRIENDS, IS A QUICK BREAKDOWN OF YOUR AUTOMOBILE COVERAGE. IF YOU HAVE ANY FURTHER QUESTIONS, PLEASE CONTACT ME IN THE OFFICE, OR CALL YOUR AGENT.
BETSY E LISTER
PRESIDENT LISTER INSURANCE AGENCY INC.
781-393-9330
Again, work with your agent in purchasing coverages; insurance is like a suit “off the rack” it can be tailored to the individual that’s purchasing the coverage, and seeing as everyone is different and has different needs and issues, buy YOUR coverage to suit YOUR needs.
Fact: Did you know that colliding with a deer is considered a comprehensive loss; not collision?
THIS WAS WRITTEN FOR MASSACHUSETTS, BUT WILL HOLD TRUE IN OTHER STATES. CHECK WITH YOUR STATE TO SEE IF COVERAGE LIMITS AND MECHANISMS ARE DIFFERENT.
MASSACHUSETTS AUTO INSURANCE IS WRITTEN ON A STANDARD MASS AUTO POLICY, BUT WORKS A BIT DIFFERENT THAT MOTORCYCLE INSURANCE