Area of Law:
The policy limits on your auto insurance policy are the maximum amounts that your insurance will pay out in the event that you have an accident. These limits apply to injuries that you or your passengers sustain as well as injuries of the people in the other car if you are at-fault for the accident. Property damage that you cause is also covered. When asked about their auto insurance coverage, most people will say that they have full coverage. Unfortunately many people do not understand what that means and how the coverages that they have on their policy apply to real life situations. In this article we will explain what the liability portion of your auto policy means and how those limits will affect you should you have an accident with injuries.
PIP refers to Personal Injury Protection. This is the first insurance coverage that kicks in should you have an auto accident. This coverage will be the first to pay your medical bills whether the accident is your fault or someone else's. This coverage is required to be on every vehicle registered in the state of Utah. It is important because it allows everyone to get the medical care they need without having to decide if they can afford the care. The lowest limit allowed by the state is $3,000. Your policy may read P3 which means personal injury $3,000. An insured can opt to increase that amount to $5,000, $10,000 or even higher if they choose to pay the higher premium.
How the PIP coverage works is that in the event of injuries in an accident, all of your medical bills would be processed and paid by your own insurance initially. These bills would be paid until the maximum limit on your policy is reached, so let's say your limit is $3,000 which is quite common. Once the maximum payout amount is reached, then your health insurance will be responsible for any remaining medical bills. If another driver was at-fault, their insurance will have to reimburse your auto insurance and your health insurance as well. They will be utilizing their own liability insurance to do so.
The minimum required personal injury limit of $3,000 may seem like plenty but in the event of a serious accident involving injuries that will need prolonged treatment, that money will be gone in no time. If that were to happen and your PIP had run out and you still needed physical therapy, you may be required to pay your own bills out of pocket or make arrangements with your health care providers to continue to give treatment but wait for payment until your case settles. Keep in mind that sometimes it can take up to a couple of years to reach a settlement and there is only a one time payment made at the very end. This period of time waiting for the payment could be a financial strain on you if you have to pay the bills above your PIP limit.
Another way that your PIP limit could affect you is that if the at-fault driver's liability insurance is maxed out on your medical claims at say $25,000 and your PIP was also maxed out at $3,000, when your settlement is reached at the end, you will not have to pay back that $3,000 to your own insurance because the at-fault drivers limit was reached. Had your PIP limit been $5000 or higher and had been used up also, you still would not have to pay that back.
The BI line of coverage on your policy refers to the bodily injury protection portion of your insurance. This coverage will be shown as limits. The state minimum requirement is 25/65/15. The first figure of 25 refers to $25,000 per person that your insurance will pay out in medical expenses. This coverage will cover injured people in your own car and the other car if you are at-fault. The 65 means you have $65,000 worth of liability coverage as a total, meaning for all people that are injured. Imagine if several people are seriously hurt and have to share this maximum amount of $65,000, this could be an insufficient amount. The last figure, 15, means $15,000 in property damage. Your insurance will pay up to $15,000 for the other car that you hit. That may seem like a lot but many cars on the road are worth much more than that.
The liability amounts that the at-fault driver carries on his policy will affect your decision of whether to sue or not. You would be considering filing a suit if they had low limits, such as $25,000, and your injury was so severe that you have been unable to work and your bills are stacking up. If the person responsible has low limits and you know they have assets, if you filed suit and won a judgment against them, they would be responsible for payment out of their own pocket. However the same would be true if the at-fault driver had low limits and no financial assets. You may win the judgment, but that is just a slip of paper and may be very difficult to collect.
UIM means underinsured motorist protection. This is a line of coverage on your own policy that would pay In the event that the at-fault driver's maximum liability amount has been reached and you PIP has been exhausted. Your policy may show something like 15/30 or 20/40. This means $15,000 per person and $30,000 per accident. In the event that your case exceeded the at-fault driver's liability limit of $25,000 and used up your PIP coverage of $3,000, then you could make a claim against your UIM coverage. If they figure your case is worth $40,000, they would deduct benefits that you already received of $28,000 and you would receive the remaining $12,000.
You can see that the limits of your own insurance coverage will affect you and your passengers and people in the other cars as well. It would be wise to sit down and look at the limits that you currently have on your own auto policy and decide if they are adequate for your needs now and in the futures.