Before we get started, and since I know many of my friends have a short attention span and won't read this entire blog entry---I want to share with you what are, in my personal opinion, 4 critically important things you should know when buying car insurance in Maryland: (i) Always get as much PIP (Personal Injury Protection) Insurance as you can afford; (ii) Never waive PIP Coverage; (iii) Buy liability/bodily injury insurance in an amount that equals the value of your assets (consider an umbrella policy if necessary for extra protection); and (iv) Be sure to purchase collision coverage and rental coverage. Yes....it is worth paying the extra premiums for this protection. For more information about the various types of Maryland car insurance coverage, visit our website.
There are two types of people--those who have been in a car accident, and those who haven't. Those who haven't been in a car accident are blissfully unaware of the problems and complications that car accidents cause. They don't understand how even minor accidents jolt the body enough to cause minor but persistent aches and pains. They don't understand how inconvenient it is to have to deal with insurance companies, doctors, repair shops and bills after an accident. They don't understand a car accident is not the "jackpot justice" that the media portrays. They usually don't understand how Maryland automobile insurance really works.
Then there's the second group--those people who have been involved in an accident. They understand how even a minor accident can be serious. No matter the size or severity, car accidents have a big impact on our lives--they disrupt our schedules, cause traffic tie ups, disrupt our family routine, and cause us some degree of discomfort, if not outright pain. Whether people in this second group try to handle their own accident claim, or whether they hire a lawyer, they begin to understand the true importance of automobile insurance.
In this post we're going to explain the most important aspects of your automobile insurance policy. It's not just to protect you when you accidentally cause a collision. It's also to protect you when someone negligently causes a collision with you.
Personal Injury Protection (PIP)
PIP is no-fault insurance that pays very quickly after an accident. PIP is personal--your PIP will pay you (and typically anyone in your car). It is used for all necessary accident-related expenses incurred within three years of an accident, though it is usually used for medical expenses and lost wages. The deadline to apply for PIP in Maryland (for Maryland insurance policies), through your insurance company, is one year from the date of the accident.
It doesn't matter who is at fault in a collision--your PIP policy will pay for your expenses, and using this insurance generally should not raise your rates. By default, every policy of insurance has $2,500 in PIP unless specifically waived. There are strict rules in Maryland about how to waive PIP that include a signed form. Unfortunately, there are no rules about renewal of the PIP waiver. We have seen cases where a client waived PIP ten years ago, and that waiver applies today despite never signing any new paperwork. Importantly, a waiver of PIP does not apply to children under the age of 16, who are always covered by at least $2,500. Recommendation: do not waive PIP. The reduction in your insurance premium is very minimal. In fact, we advise our clients to increase their PIP to the maximum. In Maryland, most insurance companies write policies for PIP (sometimes in conjunction with MedPay) up to $10,000. $10,000 will make it more likely that you can pay for your medical bills after a collision, and will take care of any lost wages from forced time off of work. For more information about Maryland PIP Coverage visit our website.
For smaller personal injury cases involving connective tissue injuries, whiplash, and relatively minor back strains, the amount of PIP coverage that you have is perhaps the most important component in determining how much you can get--in your pocket-- in an automobile claim or automobile lawsuit. This is because Maryland has a rule called the collateral source doctrine. Under the "collateral source rule", you are allowed to recover the cost of damages (like medical treatment and lost wages), even though another source (like your own health insurance or vacation/paid leave) paid for those damages. If you have $10,000 in PIP, and you have $5,000 in medical expenses, PIP will pay the full $5,000. Then, in your lawsuit against the negligent driver you can claim the entire $10,000.00 in medical expenses again including the $5,000 in medical expenses that were already paid by your Personal Injury Protection Insurance. The idea is that the negligent driver should not get a free ride because you dutifully paid your insurance premiums. The at fault driver in a Maryland car accident is responsible for the fair and reasonable value of the cost of the medical care you had to get and for your other damages.
Bodily Injury/Liability Coverage
Bodily injury/Liability Insurance Coverage pays the claims of other people who are injured if you negligently caused the collision. The risk in not having a high bodily injury component is that claimants may try to recover for their injuries through your personal assets. Recommendation: We recommend that drivers have at least $250,000 toward bodily injury. If you have personal assets in excess of that amount, then you should have Liability/Bodily Injury coverage in the amount of your assets/net-worth.
Collision Insurance Coverage
Collision coverage is a provision in your policy for repair or replacement of your vehicle if it is damaged in a collision. I have seen too many cases in which my clients have not purchased collision coverage either because they do not think they will ever be at fault for an accident or because they just dont think they need it. This is a mistake. This coverage is often the only way to get your car fixed quickly after an accident. The at fault driver's insurance carrier may delay in making repairs to your car for a variety of reasons, and without collision coverage, you may be left without a means to get to work if you do not have this coverage. There is more information about Maryland car accident property damage claims on our website.
Another level of collision coverage is for rental coverage. This coverage will generally pay for 30 days of a car rental after a collision regardless of who is at fault in the car accident. This is important coverage to have.
Even if the other driver caused the accident, you may have to go through your insurance to get your car repaired, or to get the fair market value if your car was totaled. This could be because the other side's insurance company denies liability, or because they have problems getting in touch with their insured. Recommendation: Get collision coverage and rental coverage for every vehicle that your family is dependent on. If you choose not to purchase this coverage, make that choice knowing that if you are involved in a Maryland car crash, you may not be able to get your wheels back as quickly as you may like.
Fair Market Value
Maryland does not permit accident victims to recover the replacement costs of their vehicle. If your vehicle is totaled, you are entitled to the fair market value--the cost to replace the vehicle in its pre-accident condition. Insurance companies and attorneys rely on several guides to determine fair market value, including NADA and Kelley Blue Book.
When you repair or replace your car after an accident through your own insurance, you will probably have to pay a deductible. This is typically $250 or $500 toward the total cost. Your insurance company may try to recoup their costs from the other driver's insurance company. If they do, they will reimburse you for the cost of the deductible. If you hire a personal injury lawyer, he/she should help fight to get your deductible back.
If your car is totaled and you do not own it outright, you run the risk of owing additional money on your car after the insurance company (whether yours or the other driver's) pays the fair market value of the vehicle. This can put Maryland Accident Victims a bad situation, particularly if you need to buy or finance a new vehicle. Recommendation: You should check with the financing company or your insurance about Gap Insurance, which will make up the difference between what you owe and the fair market value of your car.
Underinsured Motorist Coverage (UIM)
Underinsured Motorist Coverage is meant to protect you if you are in a collision with someone who has insufficient insurance coverage to pay your medical expenses (or someone who has no insurance). For example, if the negligent driver only has the Maryland minimum insurance of $30,000, and your medical expenses are $100,000, you will end up owing $70,000 in medical expenses. However, if you have $250,000 in UIM, then your insurance company will pay that extra $70,000 (if they agree about the reasonableness of your bills, or if a judge/jury tells finds in your favor). Recommendation: Because a serious accident can be devastating physically and financially, and because so many drivers only carry the minimum of $30,000 in insurance, we recommend that all Maryland drivers have at least $300,000 in UM coverage. This coverage is vitally important because it protects you and resident relatives who live in your household.
Uninsured Motorist Coverage (UM)
Nationally, one in seven drivers (13.8%) is uninsured. In Maryland and the District of Columbia, the number is 15%, while Virginia has 11%. Those figures are based on 2009 data, and it is generally understood that these numbers keep rising with the recession. Because of the risks of being involved in a car accident with a vehicle that is uninsured or with an uninsured driver, the best way to protect your family is through Uninsured Motorist Coverage. UM basically makes your insurance company step in to pay for anything that the negligent driver would be responsible for, up to the limit of your policy. For example, if you are in an accident with an uninsured driver and you have $100,000 in medical bills and lost wages, then your insurance company will pay $100,000 to you if you have that much or more in UM coverage (if your insurance company agrees about the reasonableness of your bills, or if a judge/jury tells finds in your favor). Recommendation: The same rationale applies for UIM coverage (and, UM/UIM is always purchased together). We recommend that all Maryland drivers have at least $300,000.00. It protects you and resident relatives of your household.
There is more information about uninsured motorist claims and underinsured motorist claims on our website.
If you have questions about your Maryland car insurance policy, or if you have been in a Maryland, Virginia or District of Columbia car accident, contact us at 1.888.213.8140 or online.