Auto Insurance 101

Auto insurance is one of the most confusing things you have to purchase. Having dealt with car insurance companies my whole career as a personal injury attorney, I would like to pass along my knowledge of the types of insurance you need to have. These are: mandatory basic coverage, Personal Injury Protection, and Uninsured/Under-insured motorist coverage.

– Mandatory Basic Coverage: In Washington State, every driver is required to have at least $25,000 in basic auto insurance coverage. If you look at your insurance plan, this will likely be seen as “25/50.” This means that your insurance will cover any one person in an accident for up to $25,000, and up to $50,000 for any one accident. This level of insurance is only the minimal requirement, though. Having seen the enormous amount of damage that a car accident can cause, I would strongly suggest getting more than $25,000 in basic coverage. Throughout my years as a personal injury attorney, I have seen a large number of accidents that result in damages greater than $50,000 in total. Because auto accidents can lead to such high damages, I strongly recommend that you get the highest level of coverage that you can afford. Other common levels of insurance are “50/100,” “100/300,” “300/500,” all the way up to $1,000,000 in coverage. This means that if you purchase “300/500” insurance, then you will be covered up to $500,000 for any one accident. The easiest way to look at it is that you should be able to cover your assets with auto insurance. For example, if the equity of your house is valued at $300,000, then you should have car insurance of at least at much. This insurance coverage is the only requirement; however it is important that you protect yourself in other ways.

– Personal Injury Protection: Better known as PIP, this type of insurance is another very important way to protect yourself in case of an accident. This is no-fault protection, meaning that it will cover your medical bills regardless of who caused the accident. PIP will also kick in to cover your lost wages and benefits as well. In other words, even if you had caused the accident, you could see whatever doctor you want with your PIP coverage. You will usually see PIP offered at $10,000 of coverage, but it can reach all the way up to $50,000. I strongly suggest that you purchase the highest level of coverage that your insurance company offers. In Washington State, insurance companies are required to offer PIP, but you do not have to accept it. Nevertheless, I cannot stress enough how important this coverage is, and even though it is optional, you should purchase.

– Underinsured/Un-insured Motorist Coverage: This is usually seen as UM/UIM coverage, and is similar to PIP in that it is not required, but strongly suggested to have anyways. The two parts of this coverage are pretty similar, and in Washington State are always sold as one cohesive piece of insurance. The un-insured motorist part of the insurance will cover you when you have been in an accident with an at-fault driver who does not have insurance. The underinsured motorist part of this coverage will protect you if you are in an accident with an at-fault driver that does not have enough insurance to cover the damages he or she caused. One trend of a down economy is that people will get less or completely rid of any insurance they used to have. To make sure you are prepared to not be harmed by this trend. You should absolutely purchase this coverage. Also keep in mind that purchasing high limits of insurance is not very expensive either. Getting 10x more coverage does not mean you have to pay 10x more. Ultimately, the more insurance you get, the better deal you will receive.