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Understanding How Car Insurance Works
Your auto insurance policy explains what your insurance will and will not pay for if you are in an accident. Understanding how car insurance works, as well as your policy’s key terms and sections, is essential to knowing what you’re entitled to when you have been injured in an accident.
However, many insurance policies can be difficult to read and understand, especially if you are not familiar with the key terms and format. At Parrish Law Firm, PLLC, car accident attorney James R. Parrish began his career working for large insurance companies, so he has developed an in-depth knowledge of how these policies work and how insurers handle car accident claims for compensation. Contact us today if you have been injured in an accident and need help understanding your insurance policy.
What You Need to Know About Auto Insurance
Here’s what you need to know in order to understand what is covered and how to protect your rights under your auto insurance policy:
The Declarations Page
The “declarations” page is a one-page summary of both the types and amounts of coverage your policy offers. Each declarations page is slightly different because each one is unique to the person who purchased the policy.
On your declarations page, you can review at a glance both what kinds of costs are covered by your insurance policy and the “limits,” or total amounts your insurance will pay for each kind of cost. The most common sections on a declarations page include sections for liability coverage, personal injury coverage, coverage for your vehicle, and any optional types of coverage you may have purchased.
On most policies, liability coverage is broken down into three types: bodily injury, property damage, and uninsured/underinsured motorist (UM/UIM) coverage.
- Bodily injury liability insurance does not pay for you or your injuries. Instead, it pays for the medical expenses, lost wages, and pain and suffering of other people who are injured in an accident that you cause.
- Property damage liability insurance pays for the costs of fixing or replacing any property that is damaged in an accident that you cause. For instance, if you are texting while driving and you hit another car, then run off the road and crash through a fence, property damage liability insurance pays for the repairs to both the other car and the fence. It does not pay to fix your vehicle.
- Uninsured/underinsured motorist coverage does pay for injuries that you suffer in an accident, if the other driver has no insurance, doesn’t have enough insurance, or cannot be located (for instance, in a hit-and-run accident). It “stands in” for the coverage that the other driver should have purchased but did not.
Personal Injury Coverage
Some states require drivers to purchase personal injury coverage as part of the state’s “no-fault” insurance system. Others, such as Virginia, do not require it. This type of coverage typically breaks down into two subcategories:
- Personal Injury Protection (PIP) coverage pays medical expenses, lost wages, funeral expenses, and other costs if you or any other person in your vehicle are injured. PIP coverage is available no matter who caused the accident.
- Residual Bodily Injury Liability coverage helps protect you if you are sued by someone else who was involved in the accident. It most often comes into play in “no-fault” states, where certain car accidents can be taken to court if the injuries suffered in them are severe enough. In those cases, this coverage helps pay any damages awarded by the court “above and beyond” the policy’s bodily injury coverage limits.
Coverage for Vehicle Damage
The types of coverage listed above help protect you if you are found to be at fault in an accident, or they help pay your personal costs if you are injured in an accident. They do not, however, help pay for damage or repairs to your vehicle. For these, you’ll need coverage for your car. The two most common types of coverage for vehicles include:
- Collision Coverage pays for damage when your car crashes into another object. For instance, if you are hit by another driver or you crash into a tree while swerving to avoid an accident, collision coverage may pay for part or all of the repairs to your car, depending on the limits in your policy.
- Comprehensive coverage pays for damage from any cause that is not covered under “collision.” This includes damage from theft, fire, vandalism, bad weather, flooding, falling objects, broken glass, or an animal.
Other Types of Coverage
Other types of coverage that you may choose to purchase include:
- Medical Payment Coverage (or MedPay) helps pay for medical and funeral expenses for you or other people who are hurt or killed in an accident involving your vehicle, as well as if you are a pedestrian hit by someone else’s vehicle. In some cases, this coverage will duplicate coverage provided by your health insurance.
- Rental Reimbursement or Transportation Expenses Coverage help pay for a rental car, bus pass, or other expenses if you have to find other forms of transportation while your car is repaired. This coverage is often expressed in both “daily” and “total” amounts. For instance, your policy might pay $20 per day for these expenses, up to a total of $600.
- Towing or Emergency Road Service pays the costs of towing your vehicle to a repair shop after an accident.
Like bodily injury, property damage, personal injury, and coverage for your vehicle, other coverage types and amounts will be listed on your declarations page if you purchased them.
The “Fine Print”
Often, the declarations page is only the tip of the iceberg. The rest of the policy is much longer – and appears to be page after page of “fine print.”
Your declarations page summarizes the what and how much is covered under your auto insurance policy. The rest of the policy explains how these expenses are covered. Be sure to examine the following sections:
- Coverage Parts/Insurance Agreement. This section provides a more detailed outline of what the insurance company has promised to provide in exchange for your premium payments, based on the coverage and limits you signed up for.
- This section tells you what is not covered by your policy. Read this section together with the “coverage parts/insurance agreement” section so you know exactly what is and is not covered when you make a claim.
- This section spells out both your legal responsibilities and the insurance company’s legal responsibilities under the policy. It typically includes instructions for paying premiums, steps for filing a claim, and procedures for resolving disagreements under the policy.
- This section defines specific terms used in the policy. It may also further explain your rights and the insurance company’s rights under the policy.
Understanding How Car Insurance Works Can Be Difficult. Choosing an Attorney Shouldn’t Be.
Insurance policies can be confusing, and insurance companies know this. In many cases, they count on an injured person’s inexperience with insurance in order to find ways to avoid paying an otherwise valid claim.
Manassas car accident lawyer Jim Parrish knows how hard insurance companies will fight to avoid compensating you for your injuries. That’s because he used to work on their side before deciding to take up for the rights of injured people instead.
Whether you have been hurt in an auto accident in Manassas, Fairfax, Warrenton, or anywhere else in Northern Virginia, contact the experienced legal team at Parrish Law Firm, PLLC today to discuss your options for pursuing a Virginia car accident lawsuit with maximum insurance company settlement. Call or fill out our online form to schedule a free, no-obligation consultation.