Thursday, May 21, 2009

How to Purchase Automobile Insurance

Do you find automobile insurance confusing?

You’re supposed to. This generation’s craftiest minds created a system to confuse, fleece, and then avoid paying you benefits after your inevitable automobile accident.

Because, based on the sheer number of motorists, you - - or a member of your family - - will be injured in an auto accident within the next seven (7) years, failing to understand and correctly purchase automobile insurance could be a hugely expensive mistake.

Below is an explanation of “tort selection”, medical and wage loss coverage, and uninsured and undersinsured motorist benefits.

“Full Tort” versus “Limited Tort”

Auto insurance purchasers have the option of selecting “full tort” or “limited tort” benefits.

Full tort” benefits allow you to file a claim or sue for any injury resulting from an automobile accident.

Limited tort” surrenders your right to file a claim or sue except for “serious injuries” defined as “death, disfigurement or a serious impairment of a body function”.

Although many insurance agents describe limited tort as less expensive and more attractive, selecting it is a mistake.

The savings are minimal (often $100 per year) and if you or your family are injured by another drivers’ negligence and carelessness, limited tort forfeits most of your rights.

Medical Bill and Wage Loss Payment

If you’re in an accident, your auto insurance company is required by law to pay your medical bills up to the amount of coverage you selected.

By law, all Pennsylvania automobile insurance policies require $5,000 of medical benefits coverage. Unfortunately with healthcare’s rising costs, $5,000 is frequently insufficient and, depending on your health insurance, purchasing additional medical coverage often makes sense.

Wage loss coverage is optional and, if selected, often pays 80% of income lost due to an inability to work. Unfortunately, many fail to select wage loss coverage thinking that the “at-fault party’s” insurer will automatically pay their lost wages.

Not only is this untrue, but the negligent driver’s insurance company usually refuses to even consider any wage loss claims until after all treatment is completed.

Thus, unless you buy private disability insurance, failing to purchase wage loss protection may expose you to having no income whatsoever while recuperating.

“Uninsured” and “Underinsured” Motorist Coverage

Although against the law, an alarming number have no - - or insufficient - - insurance and are frequently the most negligent of drivers.

Uninsured motorist” and “underinsured motorist” are also optional benefits which protect from the damage caused by these reckless drivers.

If you are hit and injured by a driver who has no automobile insurance, “uninsured motorist coverage” allows you to make a claim against your own insurance company.

Similarly, “underinsured motorist coverage” protects you in the event you are struck and injured by an underinsured driver, i.e., one who’s insurance is insufficient to cover your loss.

For example, imagine if a drunk driver crashes into your car badly injuring you and causing six (6) months of missed work, $100,000 of medical bills, $25,000 of wage loss, and permanent injuries.

If the driver had either no insurance or only the $15,000 of insurance coverage required in Pennsylvania, you’d either have no party from whom to recover or be forced to accept $15,000 as total compensation for your loss.

By purchasing uninsured and underinsured motorist benefits, you could make a claim against your own insurance company and be made whole for your loss.