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Section 9
Auto Insurance Coverage
Definitions
AUTOMOBILE INSURANCE COVERAGE
There are several different types of automobile insurance coverage. The
most important types of coverage include: Liability Coverage,
Uninsured/Underinsured Motorist Coverage, (PIP) Personal Injury
Protection,
and Collision Coverage. We will explain each of them and detail who is
covered by each policy provision.
A. LIABILITY COVERAGE
This type of coverage is the minimum coverage required by Texas State
law. The agreement between the insured and the insurer (insurance
company) provides for coverage of "bodily injury and property damage for
which any covered person becomes legally responsible because of an auto
accident" The minimum policy limits are $20,000/$40,000. This means that
the limit of bodily injury covered by a standard liability policy is a
maximum of $20,000 per person and $40,000 per accident, if more than one
person was injured. Please note that the policy may be larger such
as $50,000/$100,000 or $100,000/$300,000 and so on.
In order to better understand this particular type of coverage, there
are some terms that must be clarified.
1. Covered Person
The definition of a covered person is the insured, his or her spouse and
any "family member" or other qualified claimant.
2. Family Member
The definition of a family member is any person "who is a resident of
your household and related to you by blood, marriage or adoption.
3. Auto Accident
A situation where "... one or more vehicles are involved in some type of
collision or near collision with another vehicle, object or person.
State Farm Mut. Ins, Co. v. Peck, 900 S,W.2d 910 (Tex. App.-Amarillo
1995, no writ).
4. Legally Responsible
The term "legally responsible" is most commonly associated with the
at-fault party's liability as determined by (a) his insurance policy
provisions, or (b) a court of competent jurisdiction, or (c) the
statutes of the jurisdiction where the accident happened.
B, UNINSURED/UNDERINSURED MOTORIST
Generally, both of these types of coverage are for the purpose of
covering bodily injuries and property damages sustained in an accident
where the at-fault party does not carry liability insurance coverage or
the liability coverage is not adequate to pay the damages.
In order to recover under the Uninsured/Underinsured policy the covered
person must not be found to be completely at fault If the covered person
is at fault, the claimant will be unable to submit a claim under this
coverage.
It is also necessary that the amount of bodily injury insurance coverage
of the at-fault driver is less than the amount of bodily injury that is
suffered by the covered person. For example, if your bodily injury claim
is $15,000, and the at-fault driver's liability policy is the standard
$20,000 per person/$40,000 per occurrence policy, you will not be able
to recover under your UIM policy. If your bodily injury claim is $25,000
under the same circumstances, you would be able to collect up to an
additional $5,000.
1. If you have this coverage, it would go into effect if the at-fault
driver has no insurance or if the driver's insurance company denies
coverage under the at-fault driver's policy.
2. This coverage will apply if you are a victim of a hit-and-run
accident and there was contact between the at-fault driver's vehicle and
your vehicle (which is covered by UM/UIM).
3. It can also go into effect if you are covered and the at-fault
driver's liability insurance is not enough to cover all of your bodily
injuries.
4. You may also be able to recover if you are a passenger in another
person's car which is not insured or underinsured, but you have UM/UIM
on your own car.
C. PERSONAL INJURY PROTECTION (PIP)
This type of insurance will pay for bodily injury that the insured
driver or passenger suffers due to an auto collision. Texas law states
that you are entitled to $2,500.00 in personal injury protection unless
you explicitly reject these benefits at the time your insurance
application was filed with your insurance agency. This means that if you
do not have (PIP) coverage listed on your policy, you may still be
entitled to the coverage. This happens when the insurance company can't
produce a document with your signature rejecting the coverage. You can,
of course, purchase more coverage than the minimum by paying more
premiums.
,
D. WHAT COVERAGE SHOULD I KEEP?
You must carry a minimum of $20,000/$40,000 liability limits according
to Texas law to benefit the "innocent" party should you become involved
in an accident.
We highly recommend that you carry a minimum of:
a, $20,000/$40,00 Uninsured/Underinsured coverage or a sum equal to your
maximum liability coverage, if greater.
b. $2500, Personal Injury Protection (PIP), or greater.
c. Collision coverage for sum owed a finance company or bank on your
car.
Remember, if you have a net worth greater than the liability limits on
your policy, and you are at fault in the accident, you may be sued for
all sums above the policy limits on your policies. So it is a good idea
to carry insurance in an amount equal or greater than your net worth. If
you purchase a minimum of $100,000/$300,QOO primary liability coverage,
you will be eligible to purchase relatively low cost Umbrella Insurance
coverage which will cover you on higher liability limits.
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