Washington State Insurance Coverage
Since my law firm deals with insurance companies on a daily basis, many friends and clients have asked me: “How much auto insurance coverage should I really have to protect myself in the event I injure someone or am injured myself?"
As a personal injury attorney, I frequently review the insurance policies of my clients and other drivers. Recently, I have noticed a trend of people being uninsured or underinsured, or simply missing important parts of their insurance coverage. This trend may be due to the current economic difficulties that we’re facing. However, having the wrong auto insurance coverage for your needs can leave you or your family unprotected in the event of a car accident. I have seen many people who have saved a few dollars on their premiums, but now face significant problems because their injuries or damages are not covered, which is being “penny wise and pound foolish."
Liability Bodily Injury and Property Damage Coverage (BI/PD)
Liability coverage protects your assets. If you cause an accident, this coverage pays any damages to the injured party. Liability coverage is necessary to protect your retirement savings, home, or other personal assets from being depleted to pay these damages. If the other person sues you, your insurance company will also assign an attorney to defend you. It is important to carry enough coverage to protect your assets, which for most people is a minimum of $100,000. If you are a high wage earner, own high-end or multiple real estate properties, or have significant other personal assets, I recommend that you carry minimum policy limits of $300,000 or more. You should also know that the amount of your uninsured / underinsured motorist coverage limits are “tied" to your liability policy limits. I explain more about this below.
Uninsured / Underinsured Motorist Bodily Injury Coverage (UM/UIM)
This is the coverage I most recommend that clients add to their policy. This coverage protects you if you are injured in an automobile accident that is caused by a driver without adequate insurance. This includes drivers who do not have any liability insurance, do not have enough liability insurance to compensate you for your injuries, a hit-and-run driver, or a “phantom vehicle." A phantom vehicle is a person who causes an accident without touching the other vehicles involved and leaves the scene, such as someone who merges into your lane and causes you to spin out.
According to recent reports, one in six (approximately 16%) of Washington’s drivers are uninsured. In addition to these uninsured motorists, numerous other drivers only carry the minimum required liability limits of $25,000. The only way to protect yourself and your family is by carrying adequate UM/UIM limits.
As I mentioned earlier, your UM/UIM limits are “tied" to your liability limits. This means that if you have $100,000 in liability limits, you cannot have $300,000 in UM/UIM limits. This is another reason for carrying higher liability limits. I recommend that you get as much UM/UIM coverage as you can afford.
Personal injury Protection (PIP)
After Uninsured/Underinsured Motorist coverage, PIP is the coverage I most recommend that clients add to their policy. Personal Injury Protection provides four levels of coverage:
PIP covers all reasonable and necessary medical expenses relating to injuries received in an automobile collision. Insurance companies are required by law to offer coverage in the amount of $10,000. However, I recommend that you ask your insurance agent for the higher-limit PIP of $35,000. According to the Washington State Insurance Commissioner, the typical PIP policy costs between $.10 – $.25 per day and “is a good buy." I wholeheartedly agree.
Some clients ask why PIP medical coverage is necessary if they have health insurance through their employer. PIP coverage is useful because if you are severely injured, you may lose your job and with it, your insurance coverage. In addition, the co-payments and deductibles on your health insurance policy can become a strain after being injured. For example, attending physical therapy three times a week with a $25 co-pay requires an extra $300 per month just to make your copayments. PIP medical coverage on your policy provides peace of mind that you will be able to obtain the medical care you need to get better as quickly as possible.
If you are restricted from work by your physician following an accident, your PIP policy will pay your lost wages for a maximum of one year, after a 14-day waiting period. If you have the $10,000 PIP limits, your coverage is limited to 85% of your gross wages with a $200 per week maximum. With the $35,000 PIP limits, your coverage increases to a $700 per week maximum. This is another reason that I recommend the $35,000 PIP policy – most of us cannot live on $200 per week!
If your injuries prevent you from performing tasks such as housecleaning or yard work, your PIP policy allows you to hire someone to take care of these chores for you. Coverage is typically limited to $20-40 per day, depending on your PIP coverage, with a weekly maximum for one year following your accident.
In the event that you or one of your passengers is killed in the collision, your PIP policy will contribute towards funeral expenses. While your PIP coverage will not take care of the full expense of an average funeral, it can take the strain off family members who are grieving.
Collision Coverage (COLL)
Collision coverage pays for repairs to your automobile up to the value of the automobile itself in the event of a collision, whether or not you are at fault. One way to reduce the amount that you spend on this coverage is to increase your deductible up to $500 (amounts above $500 do not significantly reduce your savings). However, it is important that you have enough cash flow that you could come up with $500 quickly and easily in the event of a collision because most body shops will not release your vehicle until they receive your payment.
Rental coverage will provide you with a rental car until your vehicle can be repaired or is deemed a total loss by the insurance company. The limits vary between insurance companies, but are often just enough to get an economy-sized vehicle for about one month. This is inexpensive coverage and is worthwhile, considering that vehicle repairs can often take a month or more. Of course, if you have an “extra" vehicle at home, you may find rental coverage unnecessary.
Having good and comprehensive insurance coverage is vital to protecting yourself and your assets. This protection extends to your passengers.
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