Massachusetts Motor Vehicle Insurance Coverage --What You Need, What You Don't and Why
WHY YOU SHOULD READ THIS ARTICLE
Motor vehicle personal injury cases are driven by three things: Liability (Who's at fault), Damages, and the assets of the parties which may be used to pay those damages, which usually comes down to insurance coverage. This third aspect is frequently overlooked (at least prior to the occurrence!), but litigation in this field is really driven by insurance law. Additionally, clients are frequently uninformed as to their own coverage, resulting in (at best) inadequate compensation for their own injuries or potentially catastrophic financial loss and hardship.Review your coverage page NOW, with the following in mind.
The "Massachusetts Automobile Insurance Policy", presently in its seventh or eighth edition, is standard for all automobiles, motorcycles and light trucks, although there has recently been discussion of specially amended versions granted to certain insurers. There are 12 different coverages, of which 4 are Compulsory or mandatory; the remaining 8 are Optional. Some of these 8 you should consider to be mandatory, as discussed below.
Part 1 -- Bodily Injury to Others (Basic) -- Pays up to $20,000.00 per person, $40,000.00 per accident (20/40) on some claims resulting in injuries to others resulting from your negligence, or the negligence of your driver.
Beware: You are not covered outside Massachusetts, and are not covered for injuries to "guest passengers", e.g., passengers who are not family members or your employees who are not otherwise excluded; and you are not covered for injuries to employee passengers who have workers' compensation. See Part 5, below.
Part 2 -- Personal Injury Protection (PIP) -- Pays up to $8,000.00 for combined medical and related expenses and lost earnings suffered by you, your passengers or pedestrians (including bicyclists) who are injured in an accident involving your vehicle, you or your household members, no matter who is at fault or if nobody is at fault.
You must purchase this coverage, but you can save a small amount of money by having a "deductible" in any amount up to the full $8,000.00 of coverage, which is applicable to you and any household members (but not to passengers or non-family pedestrians). DON'T DO IT!! Some unscrupulous agents, particularly some online companies (rhymes with Obsessive) emphasize the minimal savings of the deductible ("if you've got health insurance you don't need this", WRONG!) and minimize the very serious consequences you may suffer if you are hurt in an accident,even if its not your fault -- PIP won't pay your medical bills (the deductible) and you can't claim them as damages versus the guy who hit you (horrible law). If your health insurance or medicare pays the bills, they will lien any pain and suffering damages you might obtain.
PIP has become an extremely complex issue in personal injury cases, which is why some personal injury lawyers charge a fee for collecting it. The better ones don't, unless a suit is necessary for its collection (if you are victorious, the insurance company will pay the fees, M.G.L. c.90 s.34M)
Note that Motorcycle PIP, while mandatory, only covers pedestrians injured by the motorcycle; not the operator or passengers. See, e.g. the excellent article on this subject by James M. Lynch, listed below.
Part 3 -- Bodily Injury Caused by an Uninsured Auto This part pays for injuries to yourself and household members who are injured by an uninsured motorist, even if you are in another vehicle, or are a pedestrian. It also covers occupants of your vehicle, injured by an uninsured motorist. Uninsured motorists are more common than you think and include stolen cars, cars from states which do not have compulsory insurance (such as NH), hit and run accidents, or situations where the other vehicle's insurer denies coverage. Basic 20/40 coverage is mandatory, and the insurer is required to sell you up to $35,000 per person, $80,000 per accident if you have that much coverage under Part 5, below. Actually, they will usually sell you any amount up to your coverage in Part 5. This is NOT expensive coverage, but could make an enormous difference in your life. 250/500 is recommended. Get as much as you can afford.
Part 4 -- Property Damage Liability -- Protects you from having to pay when you hit another car or object, and it's your fault. There is mandatory $5,000.00 coverage, which is inadequate. Many agents will try to sell you $100,000 coverage, which may be excessive. This coverage is moderately expensive; you may be better off spending the money on better Parts 3, 5 and 12. If you are poor and have no assets to protect, get less. Conversely, get more. Mass Pike guardrails are going for $100.00 per foot I understand. While you are not likely to total a $400,000 MBTA hybrid bus, you could do serious damage to a couple of parked BMWs or a house. Recommendation: $20,000 to $100,000 depending on your financial status.
Part 5 -- "Optional" Bodily Injury Liability -- This is the biggie, not only because it protects you from potential financial ruin, but more importantly, because it may control the amount of Uninsured/Underinsured coverage you can purchase (Parts 3 and 12). The higher coverage limits are not proportionally expensive, since most accidents do not result in damages in excess of the basic coverage (typical whiplash settlements are presently running less than $5,000).
Consider, however, an at fault accident with an off-duty police sergeant who cannot meet the department's stringent physical requirements for six months, despite relatively mild injuries -- $90,000 in lost wages alone.
This coverage also insures against out of state at fault accidents and at fault injuries to guest passengers (If your passenger is injured, he/she may successfully claim against you, even if you are only slightly at fault -- he/she is not at fault at all!).
Many brokers sell the basic coverage limits of 20/40, and assure their customers that they have "full coverage". It may be "full" but it is not adequate. Again, your asset situation is a factor. Get as much as you can afford. Recommendation: At least 50/100; if possible, $250/500.
Part 6 -- Medical Payments -- Pays for medical bills and funeral expenses for you and your household members, wherever you are (but not, apparently, as pedestrians), and for passengers in your vehicle, no matter whose fault the accident was. Coverage is available for at least $5,000, and is available in higher amounts. Not particularly expensive, and may be useful as a supplement, but not a replacement for PIP.
Highly recommended for motorcycles, where PIP coverage for the operator/passenger is not available.
Not subject to liens.
Part 7 -- Collision -- If you financed your vehicle, the bank compels you to purchase this coverage, which will pay to replace or repair your vehicle after a collision, regardless of fault. There is a minimum $300.00 deductable, with higher deductables available. If you believe you can afford the higher deductibles, and your loan permits it, they will significantly reduce your premiums on this very expensive coverage. Also look for various breaks for low annual mileage, antilock brakes, etc. If you do not have a loan on your vehicle, do not buy this coverage if the premiums are more than about 25% of the vehicle's value unless you are wealthy or a terrible driver. This coverage is only useful if you are at fault or the other vehicle is uninsured. Your company will "waive" the deductible and get it back from the other insurer if it is clearly not your fault. You can always go after the other driver in small claims court if it is arguably his/her fault and you do not have this coverage. Not recommended for older vehicles, except antiques.
Part 8 -- Limited Collision -- Pays for damage to your vehicle only if the other driver was mostly at fault. If the other driver is mostly at fault, you can claim under his insurance property damage liability policy (Part 4), and sue in small claims court if his insurer disagrees with you. Not recommended as being utterly useless, except in the case of an uninsured other vehicle.
Part 9 -- Comprehensive -- Insures your vehicle against vandalism, theft, or other casualties, such as fire, natural disasters, animal impacts, etc. If you finance, your bank requires this coverage. Not recommended for older vehicles, see Part 7, above. Also, if you live in an "inner city neighborhood" (nice euphemism?) you will pay high premiums and are likely to have a fight with your insurer should you make a claim. If your car is burned, it is a near certainty that you will have to sue to get paid.
Part 10 -- Substitute Transportation -- What it says. If your car is stolen or wrecked, pays at the amount you purchase per day ($30/45/100) for up to 30 days. Keep in mind that you can claim for loss of use on the other guy's policy if it is his/her fault; that the lower limits will probably not cover your rental car, and that (at the lower limit) your maximum coverage is $900.00.
Part 11 -- Towing and Labor -- Pays for the tow truck if you crash or break down. Typical tow charges are $100.00 and up. Consider AAA, which is cheaper and easier to use. Not recommended.
Part 12 -- Underinsured Bodily Injury -- Pays for you, your household members and passengers, when the other, at fault driver, is insured, but has insufficient insurance. You get this for "free" at 20/40 limits, which is substantially useless, because almost every other vehicle which is insured has that much coverage or more, and this coverage is only for the amount by which your damages exceed his/her coverage. Purchase the same amount here as you purchase Uninsured (Part 3) and Optional Bodily Injury (Part 7). Not very expensive, but perhaps crucial if the bad thing happens. Recommended for as much as you can afford, $250/500 or more.