We recently represented two clients involved in a car accident. We sat down in our office with the driver and passenger. We asked the driver what type of insurance policy he had purchased, and specifically whether he had purchased “full tort” and whether he had purchased “uninsured motorist coverage.” Our driver client told us that he thought he purchased “full coverage” but beyond that he had no idea what we were talking about. The passenger in the car lived with his grandmother who owned her own car and had it insured. The passenger client did not own his own car. The accident occurred when the driver of another car crossed over the center line of traffic and hit the car in which our two clients were traveling, head on, causing injuries to both of them.
The other driver, (the “at fault” driver), was uninsured, which meant that he did not carry auto insurance coverage on his car. He was also “judgment proof” meaning that even if we went to court and obtained a judgment against him, he owned no property or had no other insurance which could pay the court judgment.
As it turned out, our client who was the driver client had purchased an automobile insurance policy which was “limited tort.” He also did not purchase “uninsured motorist coverage.” Our passenger client’s grandmother had purchased a full tort policy and had purchased uninsured motorist coverage. We were therefore able to make a claim for the passenger, but not for the driver.
Why? In Pennsylvania, when purchasing an auto insurance policy, there are numerous options to consider. Insurance companies are willing to sell you an insurance policy, but they don’t go on to explain which coverages are better and which coverages are worse.
By far, there are four major parts of your auto insurance policy that you must understand: liability coverage, uninsured motorist coverage (UM), underinsured motorist coverage (UIM) and full tort/limited tort coverage.
Liability insurance protects you and your assets if you cause injury to someone else in a car accident where you are at fault. Your insurance company will defend you, and will hire an attorney for you, at no cost to you, if a lawsuit is filed against you, in order to pay the injured person up to the limit of the liability coverage that you purchased.
Full tort coverage means that you and your family members have unlimited access to the court system to seek compensation for personal injuries from a car wreck. Limited tort means that for a lower premium, usually about $100-$200 less per year, you and your family members have a very limited access to the court system if you are claiming compensation for personal injuries following a car wreck. In real terms, if a person who has purchased limited tort coverage does not have debilitating and disabling injuries, e.g; broken bones requiring surgical repair, herniated disks in the spine requiring surgical repair, then they have no claim. There are very few exceptions to limited tort coverage. Full tort coverage is not limiting at all. Full tort coverage is the better coverage, hands down, and should be the only choice when purchasing auto insurance in Pennsylvania. When the insurance agent or the insurance company has you sign on documents requesting either full tort or limited tort coverage you have to specifically sign for the coverage you want. Our recommendation is absolutely to purchase full tort coverage. Make sure that you sign the proper portion of the form the agent or insurance company provides you for full tort coverage. The form can be somewhat confusing and therefore it is crucial when signing the form that you know what you are purchasing. Or course, if you have any questions about what or where to sign, we’ll help you.
Liability coverage is usually listed on your auto insurance policy declaration page as “bodily injury” coverage, and is reflected as follows: $15,000/$30,000.
When bodily injury coverage is expressed that way it means that you have purchased liability coverage in the amount of $15,000 “per person” injured in the accident. The $30,000 number means that there is $30,000 available in total for any number of people who were involved in a car accident who are seeking a claim against you. So, for instance, if there are three people involved in the accident, and you were at fault in the accident, and all three people have filed suit against you, the most any one person could get from your insurance policy would be $15,000, and all three of the injured people would have to divide the $30,000 in available liability coverage from your policy. A $15,000/$30,000 policy is the minimal amount that can be written in Pennsylvania. Of course, you can ask for and purchase much higher aggregates of coverage by requesting that from your agent or insurance company. In this example, if any one person’s injuries exceeded $15,000 in value, (in other words if the jury awarded the injured person an amount of money that exceeded $15,000), or if the entire claim of all the people involved in the accident exceeded $30,000, you would be responsible for the amount that your insurance policy did not cover you for in liability coverage.
How about uninsured motorist coverage? That protects you and your family in the event you or your family members are injured in a car wreck by an “uninsured motorist.” An uninsured motorist is the bad guy/at fault driver described at the top of this article. An uninsured motorist may also be defined as a drunk driver who doesn’t carry his own coverage, or by a hit-and-run driver who flees to scene of an accident. Therefore, if you purchased uninsured motorist coverage on your car insurance policy, your insurance company steps into the shoes of the at fault driver and you can make a claim for compensation for your injuries and damages up to the limits of the amount of coverage that you purchased in UM benefits.
How much coverage in uninsured motorist coverage should you purchase? As much as you can afford and as much as the insurance company will sell you! Having UM coverage is one very important way that you can protect yourself and your family in a car accident case. It can assure you that the medical bills and future expenses caused by injuries from an uninsured driver can be paid for. And here is the big surprise. You can buy very large amounts of UM coverage from your insurance company for a very small amount of money. Why won’t insurance companies tell you this? Because they don’t make a lot of money on the insurance premiums for UM coverage, but it is a great coverage for you. Consider the fact that by some estimates close to 50% of the driving population in or around Philadelphia is uninsured. That means if you or your family members are involved in a car accident, you stand a very high chance of being injured by someone who is uninsured.
How about underinsured motorist coverage? UIM coverage protects you and your family in the event the at fault driver did not carry enough insurance coverage. Let’s say the at fault driver had a $15,000/$30,000 liability policy. And, let’s say you and your family members all had injuries that exceeded $30,000 in value. Under that scenario, you would be able to collect $30,000 in coverage from the at fault driver’s insurance policy ($15,000 maximum per person) and then you would be able to make a claim against your own insurance company for UIM benefits up to the amount that you purchased in UIM benefits. The same rules apply in terms of how much UIM coverage you should purchase as with UM coverage. Buy as much as you can afford and as much as the insurance company will sell you. It is a very inexpensive purchase for you, the insurance company doesn’t make a lot of money on that coverage, and they don’t tell you about how valuable it is.
UM and UIM coverage is not mandatory in Pennsylvania. It is optional. That means when you are sold an insurance policy in Pennsylvania unless you ask for this coverage, you won’t be able to get it. The insurance company or the agent will simply have you sign a form stating that you “waived” the coverage. Don’t waive UM or UIM coverage. And make sure you complete the form and sign off for UM and UIM coverage.
The same is true with full tort coverage. Unless you know to ask for that coverage the agent or the insurance company probably won’t offer to sell you that coverage. Instead, they will have you sign a form saying that you “waive” full tort coverage, and instead they will have you sign off on and purchase limited tort coverage. You don’t want limited tort coverage. You want full tort coverage.
There are other coverages that are also available when you purchase an insurance policy in Pennsylvania. None of them are as important as the ones that we just discussed. However, you should also be aware that under Pennsylvania law, your auto insurance policy covers medical expenses for you or your family members who are injured in a car accident. The minimal amount of medical coverage is $5,000, but you can also purchase higher amounts. It is always a good idea to purchase additional amounts of medical coverage, but you should also keep in mind if you have health insurance benefits your health insurance benefits will come into play in the event your $5,000 in medical coverage is “exhausted” or paid out. Medical benefit coverage is mandatory in Pennsylvania, meaning the insurance company must sell you at least $5,000 in medical benefits.
Income loss benefits provides coverage for lost wages in the event you miss time from work following an accident. This is an optional coverage. The insurance company does not have to sell it to you. Again, you have to know to ask for this coverage. Pennsylvania law permits reimbursement of 80% of your gross income, typically up to $5,000 in income loss benefits. You can purchase higher amounts if you ask the insurance company or the insurance agent to sell you higher amounts of income loss benefits.
Collision coverage and comprehensive coverage are also optional. Collision coverage allows you to be reimbursed the “book’ value of your car if damaged in an accident. Comprehensive coverage is the insurance benefit on your policy that allows you to be paid for the value of your car if it is stolen. Both of these coverages carry deductibles, meaning that if you have a $500 deductible and the “book” value of your vehicle is $1,000 your insurance company will pay you $500. Raising the deductible on your collision and comprehensive coverage will lower your premium.
Rental coverage is also optional. Typically your insurance company will sell you rental coverage at something like $25 per day. What they don’t tell you is that if your car is in the shop for repairs for more than approximately 30 days they won’t pay you for the additional days that you are using a rental car. For this reason, we advise all of our clients to do their very best to limit the use of a rental car following a car accident.
Stuart A. Carpey, who has been practicing as an attorney since 1987, focuses his practice on complex civil litigation which includes representing injured individuals in a vast array of personal injury cases.