The Limitations of Auto Insurance

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The Limitations of Auto Insurance

Auto insurance policies include many different limitations and exclusions which can be quite confusing, especially for new drivers. It’s very important to read through your entire insurance policy. Make sure you understand all of the terms such as the specific exclusions, limitations and deductibles, as they vary from state to state. You also need to ensure you have purchased at least the minimum legal auto insurance coverage required for your particular state.
If your auto insurance policy is written with a format such as 100/200/75, the three numbers represent your liability in thousands of dollars for bodily injury and property damage. In the above example, the bodily injury limit for any injuries you cause another individual would be $100,000. The maximum limit, which is represented by the second figure, would be $200,000 for any injury sustained in that particular accident. The last number represents a limit of $75,000 for any property damage you cause during a motor vehicle accident. The actual numbers will vary according to the state in which you live.
No Fault Auto Insurance
Each state has their own requirements concerning the minimum amount of no-fault auto insurance required by drivers and the type of coverage available. The definition of no-fault insurance policy limitations will also differ, depending on where you live. No-fault insurance limits are established according to the amount of recovery or repair costs or the type of injuries or damages that require some type of legal action.

For example, the state of Florida requires drivers to purchase completely liability insurance coverage according to their financial responsibility car insurance law. The limits are 10/20/10 with a personal injury protection or PIP insurance limit of $10,000 per individual for one accident.

Another example is California where all drivers are held financially responsible according to the state auto insurance financial responsibility law. The minimum liability insurance limits in California are established at $15,000 bodily injury for the injury or death of one individual in an accident, $30,000 for all individuals involved in one accident and $5,000 for any property damage caused in an accident.

The state in which you live will establish the required benefits coverage you must purchase; this is called a mandated benefit level. Coverage may include loss of wages, replacement services, medical expenses as well as many other types of expenses. Given that issues concerning no-fault insurance can be very confusing, it is best to discuss the situation with the local state insurance department or your insurance agent.

Limitations Concerning Lawsuits

If you decide to file a lawsuit against a reckless driver or claim monetary damages, you must meet specific criteria concerning your injuries. This is called a lawsuit limitation option. You should consult the following list to see if your injuries meet any of the following criteria. Otherwise, you will not be legally entitled to make a claim or sue another driver:
Type 1: Death
Type 2: Dismemberment
Type 3: Significant Disfigurement/Scarring
Type 4: Displaced Fracture
Type 5: Loss of a Fetus
Type 6: Permanent Injury
Permanent injuries refer to body parts that will never heal sufficiently to enable normal function.

First Party Benefits

First party benefits may cover any funeral costs, accidental death, loss of income or medical expenses incurred in an accident by you and any relatives who share the same residence. Some insurance providers refer to first party benefits as personal injury protection or PIP coverage. You can choose the maximum coverage limits when you purchase your car insurance policy. This type of insurance will cover your medical expenses, regardless of who causes an accident. You should spend time some carefully evaluating the specific type and amount of insurance coverage you require for your particular needs.

Each state has its own state of limitation laws concerning the time limit for the combined benefits of first party benefits insurance coverage. Normally, the benefit must not exceed more than 3 years. This means that your insurance provider will not pay any losses or expenses that you have incurred beyond three years from the date of your accident.

You should discuss the specific coverage limitations and first party benefits with your insurance agent. Another option is to contact your local insurance regulatory department to learn more about the limitation statues in your state. For example, the state of Pennsylvania is known for requiring drivers to purchase first party benefits. In fact, they are sometimes referred to by insurance companies as Pennsylvania Options. Pennsylvania law requires drivers to purchase at least $5000 of basic first party benefits coverage. However, you can choose to increase the limit to $100,000.
Additional Coverage Options

You can choose to purchase other types of insurance coverage. For example, some auto insurance policies also cover the cost of funeral expenses, accidental death benefits and loss of wages. If you decide to purchase auto insurance coverage for personal injury work loss, you will be reimbursed for any wages you lose because of a motor vehicle accident.

Any funeral expenses for your or a family member who dies in a car accident will be covered if you have purchased optional funeral benefits coverage. Other options include accident death which will pay if you or a family member dies in a car accident. You can choose various limits for each type of optional auto insurance coverage.

If you want accidental death benefits, funeral costs and loss of wages covered in addition to your medical expenses, you should purchase combination benefits. You can discuss the maximum limit for this type of auto insurance with your insurance agent.

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