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Types of Coverage

It's extremely important to know what your auto insurance policy covers. After all, you can't afford to find out that you weren't sufficiently covered after an accident! You need to know beforehand, so you can call your insurance company and fix it. Of course, you should always read your policy, but unless you are an insurance agent, all of the insurance-specific terminology can seem rather cryptic. To help you understand your policy contract, here is a list of coverages commonly found on New York auto policies:

Personal Injury Protection (PIP) - This is a required coverage in New York. Personal Injury Protection provides certain benefits up to a set amount if you are in an accident, including coverage for medical bills (up to 50,000), increased household expenses ($25/day for 3 years following the accident), 80% of lost wages up to a maximum of $2,000/month for 3 years, and a $2,000 death benefit in addition to the basic $50,000 PIP benefit. PIP is a no-fault coverage, meaning that your insurance company will pay PIP benefits to you, any passengers, and any pedestrians injured by your car, even if you caused the accident through your own negligence. However, there are some circumstances in which a Personal Injury Protection claim will be denied. For example, if you were driving under the influence of drugs or alcohol, you are stuck with your medical bills. Also, if you were committing a felony at the time of the crash, crashed your car on purpose, or were driving a stolen vehicle, your policy will not pay out PIP benefits. 

For an extra fee, you can also add to the basic PIP coverages. For example, Additional Personal Injury Protection is available, which raises the PIP benefit limit from $50,000 to $100,000. Guest PIP coverage extends PIP coverage to out-of-state passengers who would not ordinarily be covered. Optional Basic Economic Loss (OBEL) coverage is another additional PIP coverage-it adds an additional $25,000 worth of benefits for basic economic loss, which includes lost wages, medical bills, etc.  


Bodily Injury Liability - Often abbreviated as BI, this pays for injuries that other people suffer as a result of an accident you cause. BI also pays for their funeral expenses and for your insurance company to defend you in court if you are sued as a result of an accident. Bodily Injury liability limits are usually split limits, which means they provide a certain amount of coverage per person and a maximum amount per accident. For example, a policy may have a split BI limit of $25,000 per person/$50,000 accident. If you caused an accident and there were two people in the other car, the policy would pay no more than $25,000 for one person's injuries and no more than $50,000 for both people's injuries combined. Let's say person A has $30,000 worth of medical bills and person B has $5,000. Your policy would only pay for $25,000 of person A's medical bills, leaving you liable for the remaining $5,000. However, person B’s injuries would be completely covered because you would still be under the $50,000/accident limit.

The minimum legal liability limits in New York are $25,000/person, $50,000/accident. However, if you cause an accident that leaves someone in the other car dead, these limits automatically extend to $50,000/person and $100,000/accident. Also, if you travel to another state with higher limits, your policy will automatically pay out the higher limits if you cause an accident while you are traveling. 

Some insurance companies offer combined single limits, which makes the policy more flexible. With a combined single limit policy, you have a maximum amount that the policy will pay per accident for both bodily injury and property damage liability. In the example above, if you had a combined single limit of $75,000/accident, everyone’s injuries would have been covered.


Property damage liability (PD) - If you cause an accident through your own negligence, property damage liability pays for the damages to the other person's vehicle. It can also pay for damage to a telephone pole, guardrail, or any other inanimate object you collide with. The minimum PD limit in New York is $10,000.

Uninsured/Underinsured Motorists Coverage (UM/UIM) - This coverage protects you if you are hit by someone who is uninsured or if you are the victim of a hit-and-run. It also protects you if you are hit by someone who has insurance, but not enough insurance to cover the damage they caused you. In New York, you must have UM/UIM coverage of at least $25,000 per person/$50,000 accident on your policy. However, New York UM/UIM only applies if the accident happens within the state of New York. If you’d like to have UM/UIM apply when you are traveling out of state, you’ll have to add an endorsement (something that changes the standard insurance contract) to your policy for an additional fee. In addition to making UM/UIM coverage available out of state, Supplemental Uninsured Motorists can increase the amount of coverage to be higher than the basic limit required by law. However, you are not allowed to have UM/UIM limits that are higher than your own Bodily Injury liability limits.

Medical Payments - Medical Payments, often abbreviated as Medpay, provides a set amount of medical coverage for you and all passengers in your car for injuries as a result of an accident. You can have this coverage in addition to PIP. If you choose to have both Medpay and PIP, PIP pays first, and you would not be able to receive Medpay benefits until you have used up all of your PIP. 


Comprehensive and Collision Coverages - These coverages cover your car for physical damage. Comprehensive coverage covers your car for damages that were not the result of an accident. For example, if your car were to get stolen, you would file a claim under your comprehensive coverage. Comprehensive coverage also covers floods, fires, earthquakes and many other hazards. Collision coverage covers damage as a result of an at-fault accident, but you can also use it to get your vehicle fixed after an accident that was not your fault. This usually gets your car fixed faster, because you don’t have to wait for them to figure out whose fault the accident was. Then, your insurance company will go after the other person or their insurance company later. Comprehensive and collision coverage both have deductibles. The deductible is what you pay out-of-pocket before your insurance company will start to pay your claim. The New York standard deductible is $200, but most insurers actually offer a range of deductibles for you to choose from. The higher the deductible, the lower the premium you can expect to pay. Comprehensive and collision coverages are not required by the state, but if your vehicle is financed, the lien holder may require you to have them to protect its investment in the vehicle. It’s important to note that in most circumstances, the amount you will receive as a settlement on your vehicle is going to be less than what you paid for it. This is due to depreciation-the more you drive your car, the more value it loses, and your insurance company only wants to reimburse you for the value of the vehicle at the time of the loss. 

Also, if you are applying for a new insurance policy and your car will have these coverages, be aware that you must have your vehicle inspected for damage unless it is brand new. If you don’t comply with this requirement, your insurer may remove the comprehensive and collision coverage from your vehicle.

Accidental Death and Dismemberment Coverage (AD & D) - Accidental Death and Dismemberment gives you, your family and your passengers a set amount of coverage for serious injuries or death in an auto accident. This coverage stacks with PIP and Medical Payments. 


GAP - As mentioned above, comprehensive and collision coverages only pay for the Actual Cash Value of the vehicle-the purchase price minus depreciation. If you have a new vehicle and it’s financed, there’s a possibility that your vehicle may depreciate in value faster than you can pay the loan off. This is especially likely to happen if you only put a small down payment on it. GAP coverage bridges the GAP between what you would normally receive as a settlement on the vehicle and the amount that you still owe on it. You may already have this coverage as part of your loan, however. 


Supplemental Spousal Liability - If you are in an at-fault accident and your spouse is a passenger, he or she is generally excluded from receiving benefits under your Bodily Injury liability coverage. If you select supplemental spousal liability, your spouse would be eligible to receive payments from your BI benefits if he or she was injured in an accident that you caused. For this coverage to apply, your spouse would have to use up all of your Personal Injury Protection and Medical payments benefits first.

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