Auto Insurance, Are You Really Covered?
In Massachusetts, auto insurance is highly regulated. This means that the types of coverage, or coverage “parts” provided by the “Standard Motor Vehicle Insurance Policy” are the same for everyone in non-commercial automobile policies.
Everyone who purchases automobile insurance coverage is required to have a minimum amount of coverage in case they injure one or more persons. The minimum coverage is referred to as “compulsory coverage”, that is, the coverage that all drivers must maintain to legally operate a motor vehicle on public roadways. What differs from person to person is whether the insured driver elects to purchase “optional bodily injury coverage” (Part 5), and how much optional bodily injury coverage they choose to purchase.
In all, there are 12 parts to each auto policy: four are compulsory and eight are optional. Many drivers believe that if they have all four (4) compulsory parts of the “Standard Motor Vehicle Insurance Policy,” they are “fully insured”. Nothing could be further from the truth.
In this series, we will review each of the twelve parts of a Massachusetts automobile policy and provide – based on decades of experience in personal injury law and motor vehicle related cases – our thoughts on the most important things to consider when purchasing auto insurance.
Let’s begin with Part One of the Massachusetts personal injury policy coverage list.
Part 1: (Compulsory Insurance) Bodily Injury to Other
In Massachusetts, an individual driver is legally obligated to purchase no less than $20,000/$40,000 of automobile insurance coverage for injuries and/or losses they may cause because of the negligent operation of their motor vehicle (or someone using their vehicle with the permission of the owner). The reason the coverage has two amounts ($20,000/$40,000) is because Massachusetts requires all drivers to have at least $20,000 for each person injured and at least $40,000 in the event two or more persons suffer injuries and losses. This is known as a “split limit.” Several coverage categories of the standard Massachusetts auto policy are expressed as split limits.
As mentioned, many drivers who cause an accident often believe that by having the compulsory bodily injury coverage of $20,000/$40,000 they are “fully insured”, that is, until they learn (the hard way) that this is simply false. In fact, purchasing just $20,000/$40,000 of bodily injury coverage is actually the “minimum” amount of coverage you can purchase to legally operate your motor vehicle on a public roadway.
If you cause injuries or losses to another person or persons as a result of your negligence, the cost of medical treatment plus any resulting lost income by the injured party, can rise to tens or even hundreds of thousands of dollars or more. In the event you are found liable for the accident and the verdict is well beyond your policy limits you may be looked-to, personally, to make up the difference between the coverage limits you purchased and the amount the jury awarded to the injured person(s). Coming-up with those additional funds may, if require that you to sell or re-mortgage your home, or perhaps even file personal bankruptcy.
To help reduce personal exposure we strongly recommend that you purchase the highest optional bodily injury coverage you can afford, which we will discuss in greater detail in Part 5 of this series.
As we discussed in Part 1, there are four compulsory and eight optional parts to every Massachusetts auto insurance policy. Many drivers believe that if they have all four (4) compulsory parts of the “Standard Motor Vehicle Insurance Policy,” they are “fully insured”, but nothing could be further from the truth.
We continue with Part 2 of our series in which we review each of the twelve parts of a MA automobile policy. Based on our decades-long experience in personal injury law and motor vehicle related cases, we provide our thoughts on the most important things to consider when purchasing auto insurance.
PART 2: (Compulsory Insurance) Personal Injury Protection
Part 2 of the standard Massachusetts insurance policy is titled “Personal Injury Protection.” It is also commonly referred to as “No Fault” or “PIP” coverage. PIP coverage is a small amount of coverage designed to cover medical expenses, lost wages, and other replacement services in the event of a motor vehicle accident. The coverage applies to the drivers and occupants of each car as well as to pedestrians who suffer injuries as a result of a motor vehicle-related incident.
Here’s how it works: If you, as the driver or an occupant of a vehicle involved in a motor vehicle-related incident (or as a pedestrian struck by a motor vehicle) suffer injuries as a result of that incident, the first $2,000 in medical expenses incurred are paid for by the PIP coverage provided by your own auto insurance carrier (or if you are an injured pedestrian, by the vehicle that caused your injuries). This amount is increased to $8,000 if you are insured by Medicare, MassHealth or a self-funded ERISA health plan. If you are covered by a private, fully insured health plan, PIP will pay the first $2,000 in medical expenses plus any co-payments or deductible expenses up to $8,000. After either the $2,000 or $8,000 is exhausted, any additional medical expenses will be billed to your health insurer, and they will pay for these expenses according to your health insurance policy.
Aside from medical expenses, PIP will also provide coverage for lost wages, if applicable. PIP will pay 75% of documented lost wages, assuming a physician has indicated that you are disabled from your usual occupation. Because PIP coverage covers both medical expenses and lost wages, it is often advisable to submit the lost wage claim to the PIP carrier as soon as possible, because the lost wages cannot be recovered other than through PIP.
If, as a result of the incident, you are not able to drive, PIP will also provide reimbursement for substitute transportation (taxi/rideshares) and some other replacement services in limited instances.
Two things to note about PIP:
- Injuries suffered while operating a motorcycle are exempt from PIP, and no PIP coverage will be available to cover such expenses.
- In the event the injured party is shown to be under the influence of alcohol or drugs, PIP will generally be denied.
In our experience, medical costs associated with motor vehicle accidents often run well beyond $8,000. Coverage for medical payments can be increased by purchasing “Medical Payments” coverage (Part 5) but that is optional, not compulsory coverage. More on that in Part 5 of this series.