United States auto Insurance
Motorists in states where car insurance is compulsory must provide proof of insurance at the time of vehicle registration and may be required to carry it in their vehicles at all times. Buying car insurance is more complicated in the US than in most other countries and may include the following types of cover:
Liability insurance includes bodily injury liability, i.e. injuries you cause to someone else, and property damage liability, which is damage caused to someone else’s property, including other vehicles. In most states, liability motor insurance is compulsory, although it doesn’t necessarily include unlimited liability. Most states have laws setting minimum levels for liability insurance, but these are usually woefully inadequate. ‘Responsibility’ limits are set by each state for death or injury to one person, death or injury to more than one person, and property damage in excess of a certain amount.
If your liability after an accident exceeds your amount of insurance and you have personal assets, these are used to pay damages, if necessary, until you’re bankrupt.
Lawsuits often run into millions of dollars and litigation lawyers are among the richest legal vultures. Liability limits can usually be raised significantly for a modest extra premium. To protect yourself against astronomical damages, you can also take out a personal liability umbrella policy which increases your liability limits to a level that covers almost any event.
Around 25 states and the District of Columbia have some form of Personal Injury Protection (PIP) or no-fault insurance law. This means that if you’re involved in an accident, you can claim (up to certain limits) from your own insurance company for personal injury sustained in an accident, rather than go to court and try to prove that the other party was at fault. In states without a no-fault law, the victim files a claim against the other driver, irrespective of whether or not the driver is insured, and is paid only if it can be proved that the other driver was responsible for the accident. If you weren’t to blame and can prove it through witnesses or a police prosecution of the other driver, make sure your insurance company is informed, or you may lose your good driver (no-claims) discount.
Where applicable, PIP insurance is usually compulsory and covers bodily injury only and not vehicle damage. Those insured under PIP insurance receive prompt payment from their own insurance company, but their right to sue for general damages is usually restricted. Motorists insured in states with liability laws should ensure that their insurance covers them when travelling in states with no-fault laws. Most insurance companies automatically extend their policies to cover states with no-fault laws.
PIP cover may duplicate insurance provided by health or disability insurance policies. PIP insurance provides benefits for medical and hospital costs (the level depends on your policy), plus lost wages or income continuation, replacement/essential services, survivors’ loss/death benefit, and funeral expenses. Lost wages and replacement services are payable up to a maximum amount for maximum periods.
PIP Medical Expenses Insurance
It’s possible to buy Personal Injury Protection cover for medical expenses only. PIP medical expenses pays the medical expenses of anyone injured when travelling in your car, irrespective of fault. Depending on your policy, it may also pay your medical bills when you or your family members are travelling in someone else’s car, or if you’re hit by a car while walking. Unlike other health policies, the medical payments part of a vehicle policy pays for all medical expenses incurred, without excesses (deductibles) or co-payments (called ‘first dollar coverage’).
If you have comprehensive health insurance, you may not require this protection, although it also covers anyone travelling in your car. In some states, you can choose your PIP health insurance provider, who can be someone other than your car insurance company, e.g. your employer’s health insurance company.
Catastrophic Medical Expenses Insurance
Some insurance companies offer catastrophic medical expenses cover, protecting you against abnormally high medical bills. Whether or not you have this type of insurance depends on the level of your health insurance. If it has limitations, you’re advised to have catastrophic medical expenses cover.
Uninsured Motorist Insurance
To protect yourself against accidents with uninsured motorists and hit-and-run accidents (whether driving or walking), you should have uninsured motorist insurance. Uninsured motorist laws have been enacted in many states, requiring insurance companies to include in their basic policy cover against damage caused by motorists who aren’t insured. Uninsured motorist cover is usually equal to the minimum financial responsibility limits set by a state and is compulsory in some states. If you have collision insurance, you usually don’t need uninsured motorist insurance.
In many states, the penalties for driving without insurance are derisory, and there may be no penalty at all unless you have an accident. However, when the paltry financial penalties are compared with the often high insurance premiums, it’s hardly surprising that there are so many uninsured motorists. If you have an accident involving another vehicle, the chances of the driver being uninsured are extremely high in some cities, so it’s important to calculate the financial consequences of an accident involving an uninsured motorist.
Under-insured Motorist Insurance
This is similar to uninsured motorist cover and covers you when another motorist is responsible, but has insufficient insurance to cover the injuries or damage to property (although, if he has sufficient assets, you can still sue him).