A common statement made by car owners is that they have “full coverage” on their auto policy. Surprisingly, this phrase has no specific meaning in the law or in the insurance industry. The laws of Arizona require a very low standard of coverage, liability insurance only, so having truly adequate insurance is up to you. The following information will help you be fully covered, if you so choose.
The Liability Policy
Drivers are required to have a liability policy to cover damages resulting from an accident they caused. In Arizona, the minimum auto insurance coverage allowed by law is currently $15,000/$30,000/$10,000. This means that the insurance company will pay no more than $15,000 on any individual claim, and no more than $30,000 total, no matter how many people were injured or how much the claims are worth. The “$10,000” means that the insurance company will pay no more than $10,000 for property damage, including rental, loss of use, diminution of value, equipment, and even damage to street lights, etc. Of course, many liability insurance policies have limits higher than the minimum requirement.
Although you are legally allowed to carry this minimum coverage, if you cause an accident you may create more damages than a minimum policy will cover. Speak to your insurance agent about all the types of coverage and what it costs for different limits. You will be surprised how much more coverage you can get for a little more in premium payments.
Uninsured Motorist Coverage
If the driver who caused the accident is not insured, your own policy will enable you to make a personal injury claim if you have purchased Uninsured Motorist coverage (often referred to as UM coverage). It is mandatory that your insurance company offer you this coverage, but it is optional whether you actually purchase it. However, estimates seem to show that between 30% and 40% of the accidents are caused by drivers with no insurance. Consequently, you really should carry it. You may think you have this coverage because you have been told you have “full coverage.” This is not necessarily true, so look at your policy and talk to your insurance agent—before you are in an accident.
If the person that caused the accident has insurance, but does not have sufficient insurance to pay the proper value of the claim, then your own under-insured motorist coverage (often referred to as UIM coverage) can be used to fill some or all of the remaining gap. For example, if your bodily injury claim is worth $30,000, but the person who hit you carries a policy of $15,000, your own UIM coverage can fill in the other $15,000 and you can collect the full value of your claim. Like uninsured motorist coverage, the under-insured motorist coverage must be offered to you by your agent or company, but you do not have to buy it. However, in many instances a claim can quickly exceed the insurance available through the at-fault driver, so it is wise to purchase under-insured motorist coverage.
If you are making an insurance claim for bodily injury, the UIM claim is generally pursued as a separate claim after the liability policy has settled.
Collision coverage is the insurance you purchase to either repair or replace your damaged vehicle. If the other driver has insurance, his or her policy will be responsible for this repair or replacement. However, there are instances in which you will want to use your collision coverage anyway, for speed or convenience. For example, your company is obligated to take care of the vehicle no matter who caused the accident, so they don’t have to do a complete investigation before starting the repairs.
There are some disadvantages to collision coverage vs. liability coverage as well. For example, collision coverage will not pay for a rental unless you have purchased rental coverage as a separate item (so you may wish to do so).
If you were hit by an uninsured driver and you do not carry collision coverage, your only possible remedy is to collect from the driver personally. You have a right to do this, but it is often expensive and fruitless.
This coverage is usually sold along with collision coverage but not always. It is a separate coverage with a different purpose. Comprehensive coverage will usually cover your vehicle for issues like theft and fire. Believe it or not, your collision coverage usually will not. If you have collision coverage only, and your car is stolen, you may be out of luck.
In addition, rental car and towing coverage can really come in handy, so consider adding those.
Medical Payment Coverage
You may want to add Medical Payment coverage (med pay) coverage to your policy. This coverage will pay automobile accident medical bills up to the med pay policy limit, for anyone covered by the policy at the time of the accident. This coverage can be purchased in various quantities, but the most common amount is $5,000. this coverage is of value even if you do have a good health insurance plan because of gaps in the coverage–services out of network, deductibles, co-pays, etc. The med pay coverage can prevent you from having these out-of-pocket expenses. The premium payment for med pay is usually very reasonable.
I hope this information has been helpful. A good insurance agent can explain these coverages and others in more detail. If you ever need to make an insurance claim, you may want to consult with an attorney about how these coverages apply to your specific circumstances.