Massachusetts Insurance Coverage Basics
In Massachusetts, every automobile is required to carry a minimum level of insurance to provide some financial security in the event of an accident. Until recently, Massachusetts did not have competition, and insurance rates were set by the Commissioner of Insurance. Now there is "managed competition" which has provided consumers with some choices and the beginning of competitive prices. So what kind of automobile insurance should you have? And how much insurance should you buy? I recommend that you buy as much as you can reasonably afford, and certainly enough to protect your assets in the event of a serious accident. Obviously, the more you buy the more you pay, so you have to make your choices according to your budget. Massachusetts has two portions on the policy: Mandatory (required) coverage and optional coverage.
Mandatory Auto Insurance Coverage
In Massachusetts you need to have four different types of mandatory insurance coverage. These are Bodily Injury to Others; Personal Injury Protection (PIP); Bodily Injury Caused by an Uninsured Vehicle; and Property Damage. Mandatory coverage provides extremely minimal insurance coverage for yourself, and for injuries and property damage you might cause. Keep in mind the fact that many other drivers have only the minimum coverage required, so you need to make sure you protect yourself and your property from other drivers who might be negligent. Each of the coverages is explained below.
Mandatory Bodily Injury to Others
In Massachusetts, your automobile must have bodily injury coverage of at least $20,000 per person/$40,000 per accident. This means if you cause an automobile accident and another person is injured, the most your insurance company will pay any person is $20,000, and the most they will pay, regardless of the number of people injured,is $40,000. Passengers in your car are NOT covered. The coverage only applies to accidents that happen in Massachusetts. In other words, you don't get much insurance at all, and buying only this amount of bodily injury coverage is not recommended to anybody who can afford even a little more bodily injury insurance.
Personal Injury Protection (PIP)
PIP insurance provides $8,000 of benefits to you, your passengers, and to pedestrians, including bicyclists, who are involved in an accident with your vehicle. PIP is considered a "no-fault" insurance coverage, so the insurance is available no matter who is at fault for the accident. PIP provides payment for the first $2,000 in medical bills (and they health insurance pays), plus co-pays and deductibles over $2,000. PIP also pays for lost wages, but only at 75% of what you were earning.
Bodily Injury Caused by an Uninsured Auto
This coverage protects you, others driving your car, passengers, and household members (although some restrictions apply if the others have their own uninsured coverage) when the accident causes personal injury, and when the accident is caused by an uninsured automobile or an unidentified hit-and-run driver. The minimum coverage is $20,000 per person and $40,000 per accident, which is extremely minimal coverage in the event of a serious accident.
This coverage provides insurance for property damaged in an accident when you, a household member, or other authorized user of your car is at fault for the collision. The minimum coverage is $5,000. That amount of coverage is extremely low when you consider that even a low speed collision can easily cause that much property damage!