Once you have been in an accident, you are stuck with the insurance coverage you had in effect on the date of the accident. In 2012, there were more than 15 accidents each day in Delaware where at least one person was injured, and nearly 45 accidents each day where property was damaged. The odds are that you will have to deal with a car accident at some point in your life. Some people have bad luck and have been in five, six, or even seven accidents. I have seen too many people have their lives ruined because they didn't know that they were underinsured. This guide does not explain every detail and nuance about Delaware auto insurance, but you should have a much better understanding of auto insurance after reading it.
I have "full coverage", so I don't have to worry. Right?
That sounds good, but what does "full coverage" mean? There are many types of coverage available, and each type is available in different amounts of coverage. Some have minimum coverage amounts that you must carry by law, while other coverages are completely optional. Don't simply think that "full coverage" means you will be taken care of if you are in an accident, or if you injure someone in an accident. Instead, take a few minutes to actually learn what your insurance premium is (and isn't) buying. There is a simple reason why knowing what coverage you have and what it covers is important: If you injure someone and there is insufficient insurance to cover that person's damages, then the person can sue you personally in order to get paid, even if that means having your boss garnish your wages or having the sheriff auction off your possessions.
How can I find out what my coverage is now?
When your insurance company sends you an insurance card, it also should send you a Declarations Page. This page tells you what types of coverage you have, the amounts for each coverage, and any deductibles that apply. To get the most understanding from this guide, you should have your Declarations Page handy while reading it.
What are the different types of auto insurance?
Your insurance coverage can be separated in several ways. Some of your coverage will only apply if you caused the accident. Some will only apply if someone other than you caused the accident. Some will apply regardless of who caused the accident. Some will cover your medical bills and lost wages. Some will cover property damage. Some will cover your rental vehicle while your car is being repaired. Below are explanations of each specific major type of auto insurance in Delaware.
"Bodily Injury" or "Bodily Injury Liability" or "BI":
All three names refer to the same coverage. This coverage applies if your car is in an accident that injures another person. If your BI coverage is too small to cover the damages caused to the other person, then that person can sue you personally. "Damages" in this sense means a combination of lost wages, lost earning capacity, certain medical bills, pain and suffering, and some other types of losses. BI coverage is mandatory in Delaware. You must have at least 15/30 coverage, meaning that if you cause an accident, your insurance company will pay any individual person you injured a maximum of $15,000, but it will pay no more than a combined $30,000 to all the people you injured. This is a very low amount of coverage: a month of physical therapy costs around $5,000, a single MRI costs from $1,000 to $1,500, and a spinal surgery can easily be more than $100,000. You should absolutely carry more insurance than a minimum 15/30 policy. You should carry as much coverage as you can afford.
"Property Damage" or "Property Damage Liability":
This coverage is for damage to property that you might cause with your vehicle to someone else's property. If you back your car into someone's mailbox, scratch someone's car while parking, or you cause an accident, this is the coverage that will pay the other person for the property damage you caused. When someone hit my client's car, and her dog (which was riding with her) had to have two surgeries as a result of his injuries, I made the claim for the vet bills against the other driver's property damage policy. Property damage coverage is required by law in Delaware, although the minimum required coverage is $10,000. For most situations, that will be sufficient. If you total someone's luxury car, or if you hit a building that then requires structural work, $10,000 will likely be insufficient to cover the damages and you can be sued personally for the damages that your insurance doesn't cover.
"Personal Injury Protection" or "PIP" or "no-fault":
Delaware is one of a very few states to require this coverage, and I'm a huge fan of PIP (even though I make less in fees when someone has great PIP coverage; I love happy clients). Unlike most of the coverages I explain in this guide, PIP is "no-fault," meaning you have the same coverage regardless of whether you or someone else caused your injuries in the accident. PIP covers your reasonable and necessary medical bills, lost wages, and replacement services due to an accident; it does not cover pain and suffering. The minimum required policy is 15/30, so your PIP policy would cover everyone in your car, but no single person could receive more than $15,000 in benefits and the total for everyone in your car could not exceed $30,000. A PIP policy only applies until your benefits exhaust or until two years from the date of the accident, whichever comes first. Due to a quirk in Delaware law, a pedestrian who is hit by a vehicle uses the striking vehicle's PIP coverage.
Collision coverage applies to damage to your car from an accident. Like PIP, it is "no-fault". It is not required by Delaware law, but if you took out a loan to buy your car, the loan almost definitely has language in it requiring you to obtain and keep collision coverage. It can be expensive. Be aware that if your car is "totaled" (meaning it would cost more to repair it than the car is worth), collision coverage will only pay you the fair market value of the car, not how much you still owe on the loan. That means if you are in an accident, you often a) end up without a working vehicle; b) have to take the money your insurance company gives you under the collision coverage and hand it over to your lien-holder; c) still owe the lien-holder money on the loan for a car that has been totaled (because the outstanding loan is more than the fair market value of the car); and d) still need to find enough money to buy another car so you can get to work or make it to doctor's appointments.
This coverage sounds better than it actually is. Comprehensive coverage is just like collision insurance except it only applies when the damage to your car is from something other than a motor vehicle accident. If a tree limb falls on your car, this is the coverage that would apply. Like collision coverage, the language in your loan document will likely require you to carry this coverage, and it also will only pay out the fair market value of the vehicle. Delaware law does not require this coverage.
Unlike all the other insurance coverages I discuss here, gap insurance isn't purchased from your auto insurer. When you get a loan for a car, you have the option to buy "gap" insurance. Gap insurance applies when your car is totaled and the pay-out from your collision or comprehensive insurance is not enough to pay off the entire loan. This insurance covers the "gap" between the insurance pay-out for a total loss under a collision or comprehensive claim and the amount owed on the loan. I strongly recommend you buy gap insurance unless your down payment on the car is so large and your loan repayment period is so short that it is doubtful that you will ever have a very large "gap".
"Uninsured Motorist Coverage" or "Uninsured/Underinsured" or "UM" or "UM/UIM":
While not required by Delaware law, I strongly recommend this coverage. It applies in several different situations. It protects you in case you are injured by a driver who has no insurance or if you are injured in a hit-and-run and the other driver is never identified. If you don't have UM/UIM coverage in those situations, then you will probably never be able to recover for the damages you suffered due to the other person's fault. If you do have this coverage, then your own insurance company acts like the other person's BI insurance carrier.
UM/UIM coverage can also apply when the person who injured you has insurance, but it is insufficient to properly cover your damages. In that case, your UM/UIM policy might start providing coverage where the other driver's BI coverage leaves off. The law recently changed in this area, so when and how UIM coverage applies will depend on several factors (such as when your policy was issued).
You can choose to buy a policy that will pay for the towing and storage fees in case your vehicle is not drivable after an accident. This coverage is cheap.
You can buy a policy that will pay for a rental vehicle while your car is being repaired or so you can get around until you buy a new car. This coverage is very helpful and relatively cheap, but it is almost always maxed at either twenty or thirty days' coverage (depending on the policy), so once you get your rental car, start working on getting a new car purchased or the old car fixed or you will end up paying for the rental out of pocket after that first month has passed.
One final note
If you can't afford good auto insurance, at least make sure that you have health insurance. I don't care if it's a "Cadillac" plan or Medicaid. Just make sure that you have something. If you are on the fence about getting Medicaid (or some other health insurance), just drive on a busy road, count the number of idiots out there operating multi-ton vehicles, and then search the internet for "collateral source rule". Alternatively, talk to me or check out my website.
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