uroplatus

There are many variables with auto insurance.
In Pennsylvania, people buying auto insurance have a lot of options, and pricing will vary from insurance company to insurance company.
I'll try to provide some auto insurance info that may be helpful to Pennsylvania residents:

- in PA, the mandatory minimum coverages (for private passenger autos) are: 15/30 bodily injury liability; 5,000 property damage liability; 5,000 PIP. All other coverages (including higher coverages) are optional. Fithian didn't say what his property damage liability coverage was, nor did he say whether he purchased Uninsured or Underinsured motorist coverage, nor whether he bought more than the minimum PIP coverage, nor whether he bought rental car coverage, nor what Tort Option (Limited or Full) he selected, so its difficult to compare or comment on pricing.

- in PA, when buying auto insurance, you have to choose between the "Limited Tort" and "Full Tort" option. The "Limited Tort" option is cheaper in price. Depending on where you live in PA, the difference in price could be less than $100 per year, or it could be hundreds of dollars per year. What is "Limited Tort"? It means that, in theory, that when you're involved in a motor vehicle accident in Pennsylvania, that you may be limited in terms of recovering monies for pain-and-suffering (the law calls that non-economic damages) unless you've sustained a "serious injury" (defined as a serious impairment of a body function, or serious permanent disfigurement, or death). There are exceptions to Limited Tort (meaning that despite your selection of Limited Tort, you might be deemed to have Full Tort status if one of certain things exists, such as you occupying a commercial vehicle at the time of the accident, or the other driver was drunk, or the other vehicle was registered in another State, etc). "Full Tort" has no such limitations (hence the nomenclature), but the "Full Tort" option costs more money for your insurance premiums.

- in PA, "Uninsured Motorist" (UM) coverage is optional. UM coverage is coverage for you and your family and certain other people in your vehicle when bodily injuries are sustained by you and/or your passengers due to a motor vehicle accident which is the fault of another driver, when that other driver/vehicle doesn't have ANY insurance. So the name "uninsured motorist" doesn't refer to you, it refers to the other vehicle/driver being uninsured. This is important coverage, because it protects you (that means $$$), not the other driver. Before you reject this type of coverage on your Pennsylvania auto insurance policy, make sure you understand what you're doing.
Assuming you buy the UM coverage, you should also consider buying the "Stacking" option, especially if you have more than one vehicle. "Stacking" is not costly, and can multiply the UM coverage by the number of vehicles you have. Before you reject Stacking, you should make sure you know exactly what you're rejecting.

- in PA, "Underinsured Motorist" (UIM) coverage is optional. UIM coverage is coverage for you and your family and certain other people in your vehicle when bodily injuries are sustained by you and/or your passengers due to a motor vehicle accident which is the fault of another driver, when that other driver/vehicle does not have ENOUGH insurance. So the name "underinsured motorist" doesn't refer to you, it refers to the other vehicle/driver. This is important coverage, because it protects you (that means $$$), not the other driver. Before you reject this type of coverage on your Pennsylvania auto insurance policy, make sure you understand what you're doing.
Assuming you buy the UIM coverage, you should also consider buying the "Stacking" option, especially if you have more than one vehicle. "Stacking" is not costly, and can multiply the UIM coverage by the number of vehicles you have. Before you reject Stacking, you should make sure you know exactly what you're rejecting.

- a short side bar here: Do NOT trust that your insurance agent will give you all the correct information that you need. Your insurance agent (if you have one) has an interest in selling you some insurance, but not in selling you all the right coverages, because if you have an accident, and if your insurance company pays out monies, it could result in your agent's "loss ratios" being such that the agent will lose some or all of his bonus monies (or lose the yearly trip to a great vacation place) from that insurance company. In other words, your insurance agent may have his own interests in mind, and not yours. Your agent may either intentionally not give you all the info you need to make an informed decision, or your agent may not know enough about the effect of having or not having certain insurance coverages. So learn it for yourself. Do not put the decisions in the hands of your insurance agent.
This is not a slam against insurance agents, its instead a plea for people to fully and properly educate themselves in this important area, and not blindly rely on their insurance agent's advice.

- in PA, "Personal Injury Protection" (PIP) coverage, also known at "First Party Benefits", has a number of options (more on that later). The most important PIP issue is the option of increasing the amount of your PIP medical benefits. The required minimum is $5,000 medical per person per accident. There isn't time or space to get into all the reasons why you should have higher PIP medical coverage than the minimum, but suffice to say that you should purchase higher PIP medical coverage. Its not expensive, so you should always look into buying a LOT higher PIP medical coverage. This is coverage for you and your family and certain other people in your vehicle, and certain pedestrians, depending on whether those persons have any other source of PIP. So its important.
PIP coverage is triggered when bodily injuries are sustained by you and/or your passengers (or pedestrians) due to a motor vehicle accident, regardless of whose fault it was. Thats why this type of coverage is known as "no fault" in some other States. Note that every State in the USA is different, and not all States have PIP/no-fault coverage, and where it does exist, its different in each State.
Some options under PIP include:
** increasing PIP medical coverage up to $100,000 per person per accident. This is not expensive. You'd be surprised at how cheap it is.
** buying "extraordinary medical" coverage; its the same as PIP medical, but it starts at $100,000 and can go up to $1.1 million. This is not expensive. You'd be surprised at how cheap it is.
** wage loss coverage.
** accidental death coverage (this is very cheap to buy).
** funeral benefits coverage (this is very cheap to buy).

- in PA, COLLISION coverage is optional. If you buy it, you'll be subject to a deductible. There is a huge change in pricing for the coverage depending on which deductible you select. For example, if you pick a low deductible (and not all insurers have the same low deductible numbers), such as $250, the coverage will cost significantly more than if you chose $1,000 deductible.
"Collision" coverage pays for damage to your vehicle due to collisions with other vehicles or buildings, or driving into a tree or a ditch, etc. Depending on the insurer, deer hits are usually not under collision coverage, even though it sounds like a collision.

- in PA, COMPREHENSIVE coverage is optional. If you buy it, you'll be subject to a deductible. There is a huge change in pricing for the coverage depending on which deductible you select. For example, if you pick a low deductible (and not all insurers have the same low deductible numbers), such as $250, the coverage will cost significantly more than if you chose $1,000 deductible.
"Comprehensive" coverage pays for damage to your vehicle due to theft, vandalism, trees falling on your car, shopping carts hitting your car, or water damage, etc. Depending on the insurer, deer hits are usually covered under this coverage line.

- in PA, rental car coverage is optional. This type of coverage is not expensive, and will provide payment for a rental vehicle when your vehicle is damaged. It ties into Collision and Comprehensive coverages. If you want to buy this coverage, make sure that you buy it for both Collision and Comprehensive coverages unless you have specific reasons to not do so. And pay attention to how much rental car coverage you're buying, because you'll have some options. Rental cars usually cost a lot more than $20/day, and repairs to your vehicle could take a few weeks, so when buying rental car coverage, consider buying $35/day up to $1,500+, so that you'll have a rental car thats better than a Chevy Aveo, and you'll have it for a period of time during which your car is being repaired, or is sitting unrepaired while awaiting parts, etc.

The above only touches on some of the major issues to be concerned with, but should get you (if you're a Pennsylvania resident) started.
If any Pennsylvania residents have questions about auto insurance, talk to your insurance agent or your lawyer, or post your questions here.
We can talk about nuances of other States' auto insurance, but we might need other people (who are experts in those other States) to chime in, because I may not know the answers as it applies to other States.

DISCLAIMER: nothing in this post is legal advice. Nothing in this post should be considered legal advice. If you need legal advice, consult your lawyer.

lmariorod

Good read. Thank you.

I do however, have a question as it relates to an umbrella policy. My umbrella policy required me to get maximum auto and home coverage, 250/500 for auto and additional "slander" coverage for my HO.
Seeing that most people on this forum lease or own a nice vehicle and possibly own a nice home and a couple of bucks. What's your take on an umbrella policy? Pros and cons?

uroplatus

The question of whether to get an umbrella policy is a good one.
First, to clarify for readers who are unfamiliar with umbrella policies, here's the deal:

An "Umbrella policy" is a separate insurance policy, which is almost exclusively additional liability coverage. These types of policies are more common in commercial insurance arenas, where they more commonly are labeled as "Excess" insurance. In the personal lines (this means for non-businesses) arena, such policies might be called "umbrella", or they might go by other names such as "personal catastrophe liability insurance" (or some similar title). If you talk to your insurance agent, and simply ask about "umbrella" policies, they'll know what you mean.

Umbrella policies are not mandatory (at least not anywhere I've ever heard of), so there can be a lot more variability (in terms of coverages) in the policies from company to company, in a particular State, than you might find with auto insurance policies. However, most insurers tend to follow standard ISO policies, and tend to copy each other, so the practical reality is that industry-wide, there is little variability in these policies, from one company to another, but its important to know that there could be differences.

Umbrella policies for non-businesses usually provide extra liability coverage over and above your automobile insurance and your homeowners or renters insurance. Very few insurers will write an Umbrella policy for a personal-lines (non-business) customer unless that same insurer has written the underlying policies (auto insurance and homeowners/renters insurance). The reason has to do with controlling the claims handling from day one and dollar one. Unless you're in commercial-lines (businesses), insurers will not trust another entity to handle the claims from day one and dollar one, because another entity (insurer or TPA or you) might mis-handle the claims and expose the excess insurer's layer of coverage. In commercial-lines, there are often different insurers for the different layers of liability coverage, but large deductibles and self insured retentions are also common, so just be aware that things work differently for personal-lines as opposed to commercial-lines.
Additionally, in personal-lines (which is much more highly scrutinized by State insurance departments), for similar reasons listed above (claims handling), the Umbrella policy insurers will require that there is a continuum of coverage amounts such that where your underlying auto insurance and homeowners/renters insurance ends, your umbrella coverage will begin. In other words, there is no coverage gap between the underlying coverages and the umbrella coverage. Is it possible to have such a gap? Yes, but in reality it would be rare simply because insurance companies have seen the pitfalls, and have gotten spanked for claims handling issues, and when a problem area can be rectified by changing a behavior (by underwriting requirements, etc), they will do so.

If you're in personal-lines (not a business), most or all insurers will require that you have the highest coverage limits on your auto insurance and homeowners/renters insurance because the Umbrella insurance usually doesn't start until the $250,000 or $300,000 point. It could start anywhere, but for most insurers, the "attachment point" is at those levels.
So if you don't already have 100/300 or 250/500 liability insurance for your automobile insurance policy, you'll probably have to increase those coverages in order to buy an Umbrella policy. Additionally, if your homeowners or renters insurance policy only has 100,000 in liability coverage, you'll probably have to increase that to 300,000 in order to be able to buy the Umbrella policy.
By the way, if you don't have a homeowners or renters insurance policy, but you just want an Umbrella policy as excess coverage for your automobile insurance, you can do that. Not all insurers will sell it, but some will.
The Umbrella policies will pick-up the liability coverage from those 100/300 or 250/500, and 300K points, etc, and provide continuous liability coverage up to $1 million or $2 million, or anything else, but the $1 million and $2 million Umbrella coverages are most common. Some insurers won't sell anything over $1 million, and some not over $2 million, etc.

Umbrella policies are fairly cheap. If you have auto insurance and renters insurance, and you're adding on a $1 million Umbrella, it could cost less than a couple hundred dollars per year. If you have a house, the $1m Umbrella could be a couple hundred dollars (per year) higher, and if you buy a larger Umbrella (such as $2m), the cost will increase. Also, your claims history can be a factor that could increase the price as well. But overall, Umbrella policies are not expensive.

Why should you consider getting an Umbrella policy??
The reason is to protect your assets, and/or avoid having a large outstanding judgment against you if you are sued for causing a significant accident (such as a big auto accident where you seriously hurt or kill someone) or there is a significant accident on your property (such as someone else's kid drowning in your pool).
The odd reality is that plaintiff lawyers generally (not always) go for the easy money (thats insurance money), and most commonly that means they'll accept whatever the policy limits are. But sometimes, the injuries to other persons are significant enough, and the particular plaintiff lawyers are the rare ones that will pursue personal assets. If all those planets align, its possible that your personal assets MIGHT be at risk because there isn't enough liability insurance to pay for the injuries/judgment.

The issue of whether your assets are "reachable" by judgment creditors is too long for this discussion, and is State-specific, and can change depending on a number of factors in your life (are you married? are your assets jointly held? is the judgment against both you and your spouse or just against you?, etc, etc, etc), so for that issue you really need to talk with a lawyer in your State, AND it needs to be a lawyer who actually knows this stuff. Do NOT assume that all lawyers know everything. Just as there are home contractors who don't know what they're doing, or do a lousy job doing home renovations, there are doctors out there who should not be performing brain surgery, and there lawyers out there who really aren't competent to answer the question, but they'll gladly charge you to give you an answer and it might not be a proper answer. The point is that if you want a proper answer to the question of whether your assets are potentially reachable, you'll need to search around to find a lawyer (in your State) who actually knows how that works, and knows how to answer the question after getting info from you.
Maybe the solution is to get an Umbrella policy, so that you'll feel more comfortable about your assets hopefully being protected.

There is a potential downside to having an Umbrella policy. Its a situation that is difficult to fit into a neat little box.
We touched on it above. Most of the time (not always, but most of the time), plaintiff lawyers only seek to obtain as much of the insurance money as is on the insurance policy. So, if you drive drunk and seriously injure a pedestrian (lets say multiple broken bones and several surgeries and scarring, etc), and you have $250,000 limits on your auto liability policy, its likely that the plaitiff side will accept those limits in settlement of the injury claim, but its possible that they won't, and it comes down to whether their "asset search" reveals any "reachable" assets. (its the same when the exposure is moved over to the injured person's UIM insurer, because that UIM insurer will also do an "asset search" to see if they want to try to get some of their money back from your assets, etc).
If you have an Umbrella policy, your liability policy limits will be up to $1 million, or $2 million, etc. The existence of the Umbrella policy generally cannot be hidden (at least not for long), so the plaintiff's lawyer will likely find out about it (a smart one will always ask), and then the plaintiff's lawyer will want to get at most or all of the Umbrella policy money. But the insurer won't want to pay it all to settle the claim. So the plaintiff's lawyer will file a lawsuit against you.
Thats the main downside.
Having an Umbrella policy, although it provides more protection for you, it also is something that because of its mere existence, and because of the way plaintiff lawyers think and behave, will likely lead you to being sued if there is a serious accident.
Why is being sued a downside? For many people its not. But for some it might be. For many people, getting sued is a stressful situation, and getting deposed in the lawsuit, etc, is a stressful and annoying situation. Only you can decide whether this is a downside for you or not.
Overall, its probably better to have an Umbrella policy than to not have one, but its very fact specific and specific to your overall financial situation.

The other downside, is that you might have to increase your underlying coverages (auto and homeowners/renters), which means higher premiums.

As an aside, even if you consider yourself "judgment proof" (meaning that you have no assets), and if you don't care about causing horrible accidents, etc, something to consider is that if you get a judgment against you, which does not get satisfied by insurance, the judgment (depending on the State) can be in place and renewed (depending on the State) for years into the future, which could impact your credit rating, and your ability to get certain loans, so having enough insurance coverage may be something that even "judgment proof" folks should think about.

DISCLAIMER: nothing in this post should be considered legal advice. If you need legal advice, you should talk to a lawyer in your State and in whatever States you're dealing with.

Fithian

In PA, auto insurance is not required. There is a requirement to make available negotiable financial instruments equal to about $60,000 (two cars) in case of a claim by another party. You would be responsible for any damage to your car or person.

http://www.dmv.state.pa.us/pdotforms/misc/self_ind.pdf

uroplatus

With all due respect, that statement is incorrect.
Automobile insurance in PA is REQUIRED. But there is a possible exception to the requirement, which is to APPLY to the PA Insurance Dept, to be approved as self-insured. The PA Insurance Dept does not necessarily approve everyone.

I'm not trying to argue, I just want to add some clarity for the mass of readers here.

Are you going to apply to the PA Insurance Dept to get approved to be self-insured? If not, then you're required to have auto insurance in PA.

lmariorod

What is your opinion on "right of recourse" when accepting a check from an Insurance co. for a total loss. Should you contest it? Or do most people just take and cash the check and move on?

Seems to me that most insurance co. will want to low ball your total loss.

I realize you are not giving legal advice, but you seem to know lots more than most of us.

acitrano

You might be able to lower those a bit by self-insuring a little (that is, raising your deductibles.)

I live in LA, am almost twice your age, have a clean record, $1k deductible, max liability limits ($500k CSL). Pay around $1800 a year. Not cheap, but the funny part is this: when I went from my '05 S4 to a '13 S5 cab, the premium increase was a whopping eighty bucks.

uroplatus

It looks like you're in NY, and many things are different in NY, as compared to PA, but there are enough similarities that we can talk about the issue you raised. However, keep in mind that there may be some wording differences.

"Total Loss" vehicle situations are almost always ones in which the person who has the vehicle believes he/she is getting screwed, because the money offered for the "total loss" payment never seems like enough.

The insurer that owes the "total loss" payout only owes the ACV (actual cash value) which means the value of the vehicle seconds before the total loss occurred. The "value" of the vehicle can never really be determined down to the penny, because vehicle values vary depending on so many factors (condition, mileage, etc), but certainly some average figures can be arrived at (which are guesstimates as to what that vehicle would have sold for if it were sold prior to the total loss), and ultimately some agreement between the insurer and the person who "owns" the vehicle (the term "owner" is sticky, because often the true owner is a finance company who has the Title, and if that finance company shows as a lienholder on the Title, then the finance company must be paid first) must be arrived at.

What do most people do when their vehicle is a "total loss"? Yes, they take the amount offered from the insurer, and they move on. Is that the right way to go? It depends.
If the amount offered by the insurer is fair, then yes, take the offer. If you feel that the amount offered is not fair, then you should negotiate with the insurer and see if you can agree upon a higher number. Some of the reasons that an insurer might agree to increase their "total loss" payment offer are:
-the vehicle damage appraiser didn't accurately consider the condition of the vehicle;
-the vehicle damage appraiser didn't take into account the improvements to the vehicle, or the new tires on the vehicle, or the recent timing belt change, or the fact that the vehicle had never seen winter and was in perfect condition prior to the loss (remember that the appraiser doesn't see the vehicle until after the loss, and if its a few days after, it could be at a tow yard after there is mud on it, etc, etc).
-the average for the sale prices of other similar vehicles is inaccurate because the vehicle sales used in the average calculation were not similar to your vehicle.

Will insurers "low ball" you? They are not supposed to offer you anything less than what is fair, however we all know that some insurers will do that.
Should you argue, and fight? Sometimes you should.
Make your arguments, and there is a good chance (with most insurers) that you'll be able to get some more money.