Auto Insurance

Auto Insurance for the Greater Philadelphia, PA area

  1. Liability. Understanding auto insurance begins with an understanding of liability. While assets (home, stock, goodwill) create value, liabilities detract from your estate’s value. It is easiest to think of liability as our inherent responsibility for our actions or, in many cases, inactions. For example, if I do not follow the traffic laws and cause an accident, I am “liable.” This is where auto insurance begins, with bodily injury liability and property damage liability. Bodily injury is insurance that pays when you are liable for someone else’s physical injury, sickness, or death as a result of an auto accident. Property damage liability is defined as damage or destruction to someone’s property.

  2. First party coverage. In a no-fault state like Pennsylvania, your auto insurance medical payments coverage is first in order of payment of your medical bills, doctor’s visits, treatment, et cetera, regardless of which driver caused the accident. Your insurance carrier pays your medical. This become grossly important when the other driver is negligent. The income loss portion of your policy will trigger when you miss work after a covered automobile loss where medical payments coverage has been triggered.

    Tort. No fault laws vary from state to state. PA operates within the compulsory no fault system which allows the insured to pay less, if they waive their rights to recover pain and suffering compensation. Examples of pain and suffering are: loss of interest in hobbies, depression, appetite loss, loss of self confidence (due to surgery), post traumatic stress disorder, and loss of consortium. Your tort election is the determining factor when dealing with your ability to sue the other driver for non-economic loss, i.e., pain and suffering. Limited Tort precludes you from recovering such loss, while full tort allows for reasonable compensation when there is pain and suffering as a result of another driver’s negligence.

  3. Uninsured Motorist (UM)/Underinsured Motorist (UIM). This is one of the most misunderstood auto insurance coverage options. It DOES NOT protect your vehicle; rather it protects the auto insurance policy owners and drivers if they are injured by an uninsured or underinsured driver that is deemed negligent. The key word here is negligent. If I am negligent in an accident with an uninsured motorist, the coverage is moot.

  4. Last but not least, your car coverage. Deductibles, deductibles, deductibles. Why do I have to pay a deductible when I pay the insurance company each month? The answer is: you do not have to. The greater the deductible, the greater the chance that you will take a future loss, so therefore the lower the auto premium. Rental car coverage is coverage that is triggered when you open a physical damage claim. Other than collision, losses are non chargeable losses that do not change your premiums. Typically, the deductible costs are minimal, so it is best to choose the lowest deductible possible. Other than collision claims, most fall under $500.

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