Auto Insurance – What to think about when signing up for a new policy

Posted Friday, June 05, 2015 by Ed Harper

When signing up a client with a new insurance policy, an auto insurer must follow several steps:

First, Washington state law RCW 48.22.085 requires all auto liability insurers to offer personal injury protection (PIP) to their clients. Clients do not have to purchase this, but to decline they must do so in writing. If a client decides after initially rejecting PIP that they want it, they must submit a written request for the insurer to include PIP in the policy. PIP covers medical bills, some wage loss, funeral expenses, and loss of services up to the limits of the specific insurance policy.

Also, Washington state law RCW 48.22.030 requires all auto liability insurers to offer underinsured motorist (UIM) coverage and uninsured motorist (UM) coverage to their clients. As with PIP, if a client decides to decline UIM, they must provide a written rejection. The purpose of this insurance is to cover expenses caused by another motorist who either doesn’t have any insurance coverage (UM) or whose insurance policy only covers part of the expenses (UIM) because their policy limit is lower than the damages. It is important that clients understand what the limits of their own policy are in relation to the UM/UIM they are considering since the more coverage their policy provides, the more likely it is that another driver’s policy will not cover as much. Even if the other motorist is at fault, a client’s insurer might not have to pay all expenses unless the client’s policy includes sufficient UM/UIM.

Auto liability insurers must be clear about the terms in the policy, including explaining terms that are not readily understood. Similarly, the client should make a reasonable effort to understand the terms and agreement. However this can be tricky if a term has a meaning within an industry different from the meaning in plain English. One example is the term “full coverage” which in the auto insurance industry can refer to collision and comprehensive coverage only. Note that this does not have to include either PIP or UM/UIM coverage, for example. Keep that in mind when signing up for new insurance and be careful to understand the terms in the agreement.

It is important to know that UM/UIM coverage does not cover all property damage. Another type of coverage is uninsured motorist property damage (UMPD). Be sure to understand the property damage limit of your UM/UIM coverage since it may or may not apply in certain cases, such as for a hit-and-run. However, rather than buying many specific policies, an umbrella policy is one way to extend your liability limits of an insurance policy through a single addition. It provides coverage for injuries you or your loved ones may have caused; property damage; and, some personal liabilities and lawsuits. If you already have auto insurance but realize you want more, it is one way to protect yourself without buying more auto-specific insurance.Thanks goes to Daniel Dedo for helping assist in this blog post!

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Harper Law PLLC
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