Bodily Injury Liability Coverage
Required minimum: $15,000 per person/$30,000 per occurrence
Recommended minimum: $100,000 per person/$300,000 per occurrence
This coverage pays the person/persons that you are responsible for injuring/killing in an accident. It would cover you and generally covers anyone else that you give permission to drive your car. We recommend that you carry more than the required minimum for a couple of reasons:
1. If you seriously injure or kill a person or persons in an automobile accident, it’s obvious that $15,000 will not be enough to pay any one person and $30,000 will not be enough to pay for several people. However, your insurance company does not have to pay any more than $15,000 for any one person that you seriously injure or kill or more than $30,000 for everyone that you seriously injure or kill.
This may result in you being sued and having a judgment against you for a lot more than the money your insurance company is going to pay. A judgment against you may result in loss of your house or personal property, attachment of your bank account, ruining your credit, or a loss of your driver’s license. The higher your coverage limits, the more protection you have.
2. The second reason we recommend higher limits is the added protection for you and your family. This will be discussed further in the section on uninsured and underinsured motorist coverage. Basically, we want you to have as much uninsured/underinsured motorist coverage as you can afford. However, your uninsured/underinsured motorist coverage CANNOT be more than the limits you select for your bodily injury liability coverage.
Property Damage Liability Coverage
Required minimum: $5000
Recommended minimum: $25,000
This coverage pays for the damage you cause to the property of another person. Just as with bodily injury liability coverage, the more coverage you have, the more protection you have. What if you rear end a new Mercedes at a high rate of speed and knock the Mercedes into a new Lexus, totaling both cars. There is no chance $5000 worth of coverage will pay for that type of claim.
To be honest, neither will $25,000 worth of coverage. However, with the higher coverage limits, you can often get the car owner or insurance company to accept the higher limits as payment in full, rather than having to endure a lengthy lawsuit.
Medical Expense Benefits
Required minimum: $5000
Recommended minimum: $10,000 (or as much as you can afford)
Pennsylvania law requires that if you or a family member that resides with you is injured in a car accident, your automobile insurance is the first source of payment for your medical bills.
Over the years, I have found that most people are a bit confused by this. There have two concerns:
1. If I am not responsible for a car accident, why should my insurance have to pay my medical bills?
2. If my car insurance pays my medical bills, will my premiums go up?
The short answer is this. Your auto insurance has to pay your medical bills because that is the law in Pennsylvania. As long as you are not responsible for the accident, your insurance rates cannot go up. As far as the recommended coverage, the more you can afford the better off you will be, particularly if you do not have health insurance.
Considering the cost of healthcare, including the potential cost of hospital treatment, surgery, MRIs, and other medical services, $5000 is not going to go very far. Keep in mind, you are the one that will ultimately be responsible for any unpaid medical bills. Hopefully, there will be some source of payment beyond the Medical Expense Benefit of your automobile insurance policy, such as health insurance, or making a claim against the insurance of the person who caused the accident. However, that’s not always possible.
*Note About Health Insurance:
Automobile insurance is the first and required source of payments for any medical bills in an automobile accident. Medical/health insurance is the second source of payments. If and when you exhaust the limits of your automobile insurance coverage, your healthcare providers can start billing your medical/health insurance.
As long as the proper procedures are followed, your medical/health insurance will be responsible for paying your bills, per the terms of your insurance coverage. It is important to note that your medical bills in an automobile accident case must first be submitted to your automobile insurance carrier, and then to your health insurance (if you have health insurance). Failure to submit the bills in a proper and timely fashion may result in you becoming personally responsible for the bills.
Income Loss Benefits
Required minimum: not required
Recommended minimum: $1000 a month/$5000 total
If you cannot work as a result of an automobile accident, and you have income loss benefits coverage, your insurance company will pay you 80% of your lost wages up to the limits of your coverage. Generally speaking, the most coverage you can get in this area is $2500 a month/$50,000 total.
Let me give you an example. Let’s say you earn $2000 a month and have the recommended minimum coverage of $1000 a month/$5000 total. If you are out of work for six months your automobile insurance will pay you 80% of your wages up to your coverage limits, which means they will pay you $1000 a month. They will pay you $1000 a month up to the total amount of your coverage of $5000. Therefore, you would get a check for $1000 a month for five consecutive months, which is the limit of your coverage.