You Have No Choice
In Washington State, you must have insurance in order to drive. If you are caught without insurance, the fine may exceed the cost of insurance and you’ll still have to buy the insurance.
You Have Lots of Choices
There are many companies that are willing to sell you insurance. Perhaps even more important than choosing an insurance company is understanding the types of coverage available.
Insurance is a contract to pay money in certain situations. If you don’t know what situations you have coverage for, you are either throwing money away or taking unintended risks. Here are the basic types:
Liability: This pays other people if you are responsible for their injuries or property damage. This is what you are required to have.
Minimum liability coverage is 25/50/10. This means that, if you cause an accident, you must have insurance that will pay at least $25,000 per injured person up to a total of $50,000.
The $10,000 is for property damage coverage. Since it’s hard to find a car worth less than that, you might consider having more than minimum coverage.
Similarly, $25,000 doesn’t go far if someone is seriously injured.
UIM: This stands for underinsured motorist insurance. Sometimes it’s called uninsured motorist coverage. Even though you’re required to have car insurance— surprise— many people don’t.
UIM comes into play if someone damages your car or hurts you or a passenger and has no insurance or not enough.
This coverage is optional. People who are not responsible drivers also tend not to be well insured. This coverage is a good idea.
PIP: PIP is Personal Injury Protection. Under this coverage, your insurer should pay all bills for medical treatment necessary as a result of a car accident, no matter who is at fault.
Also, under some policies, this coverage might pay if you are unable to work after a car accident. PIP coverage is optional and, in my opinion, usually pretty lousy. If you have health insurance, you should already be covered for medical bills from a car accident or anything else.
I have never seen a policy that begins paying for lost wages before you have been off work for two weeks. Most people are back to work before this coverage even begins.
What’s more, most policies only pay 85% of your wages up to a maximum of $200 per week.
Finally, if you require medical treatment for an extended period of time, your insurance company would likely force you to attend an IME. Your insurer will tell you this stands for “Independent Medical Examination.” It should really be “Involuntary Medical Examination” because they are rarely independent.
Basically, the insurer pays a doctor who has never seen you before to repeat one of the following lines: 1) you should have already recovered; 2) you were never hurt; or 3) maybe you were hurt, but not in the accident that they are supposed to be covering you for. While this may be a cynical description of this coverage, I have developed this view after seeing hundreds of IMEs.
I don’t have PIP coverage. The only good thing I can say about it is that it’s a lot cheaper than health insurance. If you don’t have health insurance and drive a car, it might be a good deal. Otherwise, save your money and just say no.
Towing: This is a real deal. Expect to pay about $20 per year.
Besides towing, this coverage usually pays for lock-outs and jump starts. Towing likely covers everything you’ve ever used AAA for.
AAA, by the way, is the American Automobile Association and is a leading force against mass transit and other “green” legislation. If you are even vaguely environmentally friendly, you shouldn’t give AAA your money. Get towing insurance.
Collision: This pays for the damage to your car in an accident no matter who is at fault.
If you are making payments on a car, you are likely required to have this. However, if you are driving a car worth less than about $3,000, you are probably wasting your money.
Comprehensive: Comprehensive covers damage to your car and some of its contents when the loss is not caused by a crash. For instance, it might cover damage caused in an earthquake or a riot. It often covers damage to windshields caused by rocks.
Anything You Do or Say
Will be Used Against You
Insurance companies charge different amounts based upon your driving history and other factors. Here’s a word to the wise, don’t lie to try to save a few bucks. That’s called fraud in the inducement, and it may allow your insurer to refuse to pay when you really need the coverage.
Also realize that, whatever company you choose to insure you, the company is in business to make money. It follows that insurers like to collect premiums but would prefer not to pay claims. Don’t give them an excuse. If you ever need to make a claim, don’t lie, don’t guess, and don’t exaggerate.
Property damage can usually be resolved without much fuss. If you are injured in a collision, however, you probably need an attorney.
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