This is the backbone of the insurance policy, namely, the coverage that will financially protect you when you cause an accident and someone is injured. That injured person could be in another vehicle or a passenger in your own vehicle.
Your policy will contain liability limits, expressed in dollar amounts. Most policies contain what are called split limits, such as $15,000/$30,000, $100,000/$300,000, etc. Using the latter figure as an example, a liability policy carrying $100,000/$300,000 would pay up to $100,000 in damages you have caused to any one individual injured in the accident, and up to $300,000 in the aggregate. In other words, if there were three people who sustained injury damages of $100,000, your policy would cover all three individuals up to $100,000 per claimant.
Each state has its own minimum financial responsibility limits. Driving a vehicle without liability coverage is a violation of law in most states.
Collision Coverage
Collision coverage pays for the cost of repairing your vehicle caused by a collision with another vehicle or object such as a tree or median. If your vehicle is totaled beyond repair, collision coverage is to provide you with enough money (including sales tax and other customary fees) to purchase a replacement vehicle of like kind and quality.
Use of after market parts
There have been a significant number of lawsuits, and a great deal written, about the propriety of insurance companies using what are known as after market parts to repair an insured's vehicle. After market parts can essentially be divided into two categories. The first category would be used parts taken from other vehicles, specifically, from junkyards or salvage yards. The second category would be replacement parts that have been manufactured by a supplier other than the vehicle manufacturer itself. While these parts are new in the sense that they haven't been used before, significant debate exists as to important issues such as their quality, their safety, their fit and the chance their use will void the manufacturer's vehicle warranty.
The other method of repairing a vehicle is to use what are called OEM parts which are parts designed and manufactured by the Original Equipment Manufacturer, such as Ford, General Motors, Toyota, etc. As implied, these are parts that are specifically identical to the damaged components of your vehicle because they have been manufactured by your vehicle maker. To state the obvious concern for insurance companies, OEM parts are usually more expensive than after market parts, thereby motivating insurance companies to use after market parts to repair vehicles whenever they can do so.
The question then becomes When can an insurance company legally and properly use after market parts to repair an insured's vehicle? At present, there is no exact or defined answer to this question as the issue is still being litigated around the country as well as being debated by departments of insurance in various states. InsuranceAid.com, however, can offer some general guidelines and suggestions as follows:
1) Check to see if your insurance policy contains language which allows your insurance company to use after market parts. In light of all the controversy that has arisen over this issue, most insurance companies have inserted language in their policies in recent years which specifically purports to allow the insurance company to use after market parts to repair a vehicle. While the inclusion of that type of language arguably helps the insurance company's position, it does not end the inquiry because the provision may not be enforceable in your state.
2) It is recommended that you advise your claim adjuster at the outset of your claim that you only want OEM parts used to repair your vehicle. While the claim adjuster might decline or ignore your request, you have at least made your record of requesting OEM parts which will place you in a much better position should problems develop down the road due to the use of after market parts. Make your request to use OEM parts early and in writing (keeping a copy of your letter).
3) Consider a compromise with the insurance company as to what kind of repair parts to use, such as agreeing to use after market parts for certain repairs for which it probably makes little difference compared to other repairs where OEM parts are much more important. For example, using after market parts for non-visible and non-safety related repairs may be reasonable. The point is to choose your battles wisely, giving in where you are comfortable doing so but aggressively pursuing your request for OEM parts where you feel it's necessary for reasons of safety or appearance.
4) One of the biggest issues is the age of your vehicle.
It is much more reasonable to insist on OEM parts for a vehicle that's a year or two old as compared to a vehicle that is eight years old. Remember that the obligation of the insurance company is to put you in pre-loss condition. Therefore, the newer the vehicle, the more reasonable it is to insist on OEM parts to repair the vehicle.
5) Finally, to the extent the claim adjuster insists on using after market parts that you are not comfortable using, prepare and present the claim adjuster with a statement for the adjuster to sign as follows:
On behalf of [insert insurance company name], I have refused to use OEM parts to repair one or more components of [insert your name]'s vehicle. In deciding to use parts other than OEM parts, [insert insurance company name] represents that the parts actually being used are of the same quality, integrity, safety, and fit as OEM parts and that should there be any problems, losses, injuries or damages occurring at any point after repairs are made where the use of after market parts has caused or contributed to those damages, injuries or losses, [insert insurance company name] agrees to bear any such losses or damages resulting from the use of after market parts.
Comprehensive Coverage
Comprehensive coverage pays for any damage to your vehicle for reasons other than a collision. For example, comprehensive coverage pays for damages caused by hail, flood, vandalism, and theft.
The discussion above under Collision Coverage concerning the manner and method of repairing a vehicle, in terms of after market or OEM parts, is equally applicable to claims pursued under the comprehensive coverage of the policy.
Medical Payments Coverage
This coverage, commonly called med pay, works pretty much like a routine health insurance policy. It pays reasonable and necessary medical bills, up to the policy limits, incurred by individuals in your vehicle, including the insured driver, without regard to who was at fault for the accident. The bills must be for medical treatment related to the accident and the treatment must be incurred within a certain period of time, usually anywhere from one to three years after the accident (your policy must be consulted for the exact time frame allowed).
Med pay benefits are usually offset or reduced by any payments the claimant receives from any other source such as private health insurance coverage. As a result, some believe having med pay coverage is not necessary or worth the premium where regular health insurance coverage is also in force. Under most circumstances, you won't be allowed to collect under both your med pay and your health insurance policies, making the med pay coverage duplicative of other coverage you already have. On the other hand, med pay coverage provides payment for medical bills of all others in your insured vehicle, including non-family members who may not have other available coverage such that the med pay coverage would be important to them. As can be seen, the determination as to whether to carry med pay coverage is a decision which the policyholder must make dependent upon their own individual circumstances.
Uninsured Motorist Coverage
Commonly called UM coverage, uninsured motorist coverage protects you when the other driver in the accident is at fault and is driving without liability insurance coverage. While that is against the law in virtually every state, there are certainly many motorists who fail to carry the legally required liability coverage. Under those circumstances, UM coverage protects you by compensating for damages caused by the uninsured driver up to the UM policy limits. Stated differently, you are entitled to be compensated by your own insurance company to the same extent and amount as the other driver would have had to compensate you had the other driver had liability coverage.
Example: Another driver is the cause of an accident in which you suffer total damages, including medical bills, lost wages, pain and suffering, etc., in the amount of $12,000. The other driver carried no liability insurance. You have uninsured motorist coverage under your policy with limits of $15,000. Your insurance company would have to pay you $12,000 for the total damages you have sustained, but can't recover, from the other driver.
Underinsured Motorist Coverage
Commonly referred to as UIM coverage, underinsured motorist coverage protects you when the other driver at fault has an insurance policy providing liability coverage but the amount of available coverage is insufficient to compensate you for your total damages. Under these circumstances, you would pursue a UIM claim against your own insurance company for the amount of your total damages that exceeds the other driver's liability limits. The UIM claim is normally not formally pursued until the adverse driver has paid its policy limits but it is not always necessary to recover the adverse driver's policy limits before your own insurance company should consider and evaluate your UIM claim. For example, if your total damages may exceed the other driver's liability limits, you should notify your own insurance company and commence the processing of your UIM claim as soon as possible.
Example: You carry UIM limits of $100,000. Your injury claim is worth $75,000. The other driver which caused the accident has liability limits of only $15,000. In addition to the $15,000 you collect from the other driver's insurance company, you are entitled to recover an additional $60,000 from your own insurance company so that your total damages collected would equal the sum of $75,000.
