What You Should Know About Auto Insurance in Virginia

Make Sure You Have The Right Auto Insurance Coverage

New technology, computers, Smartphones, tablets, etc., mean we can now purchase car insurance without the traditional face-to-face meeting or phone call with an agent.  The problem with purchasing insurance online is that you may not know what you’re actually paying for and how it may protect you. You don’t get the advice of an agent who can explain your options and make recommendations.  Most people don’t bother to take the time to try and educate themselves about insurance when they purchase online, and don’t even know what they have bought.

I have often heard “I have full coverage” from new clients when I ask what kind of insurance coverage they have.  Rarely do people know what the financial limits of their policy are, and even more rarely do they know what optional coverages they have purchased.  The term “full coverage” doesn’t really have any meaning any more because there are so many options. Yet, with the expansion of motor vehicle insurance to include uninsured motorist and underinsured motorist coverage, understanding auto insurance coverage and having adequate limits of coverage have become even more important.[1] Auto insurance not only protects you with regards to liability, but also provides protection against the person who is “at fault” but has no or inadequate coverage.

Auto insurance coverage is described as either “first party” or “third party” coverage.  “First party” auto insurance coverages include collision coverage, comprehensive coverage, medical payments (med pay) or medical expense, loss wage income, towing, substitute vehicle rental, and uninsured/underinsured coverage.  First party coverages benefit the person who is insured under the policy.  Except for uninsured and underinsured coverages, generally first party coverages will benefit the policy holder regardless of who is at fault.

Third party coverage is basically liability coverage. Third party coverage is  designed to protect you when you are “at fault” in an accident.  Both bodily injury and property damage coverage are parts of third party coverage.

Just because you have purchased an auto insurance policy does not necessarily mean that you are sufficiently covered.  You need to carefully consider what coverages you want and then what limits you want.  On review of the cost of certain coverages and limits, you may decide to drop an optional coverage in favor of having higher limits on other coverages.

Begin by looking at the basic coverage limits for bodily injury and property damage liability.  Basic auto insurance coverage limits are usually described as “split limits” in 3 parts, such as “25/50/15”.  The first number is the maximum the insurance company will pay out to one claimant for bodily injuries or death in one accident.  The second number is the maximum amount the insurance company will pay to all claimants for injury or death from one accident, regardless of how many claimants are injured in that accident.  The third number is the maximum amount the insurance company will pay to all claimants in one accident for any property damage. number.  Thus, “25/50/15” means the maximum limit for one person’s injury or death in one accident is $25,000; the maximum limit for all claimants’ injuries or deaths is $50,000; and the maximum limit for all claimants property damage is $15,000.

In Virginia, the limits for uninsured and underinsured motorist coverages are the same as the liability coverage limits, unless you choose a lower limit in writing (which is a bad idea).  The minimal limit of liability coverage that one can purchase in order to be able to drive in the state of Virginia is $25,000/$50,000.[2] This means that if you are “at fault” in causing an accident resulting in injuries, the most protection you will have is $25,000.00 for any one person who is injured and $50,000.00 for all persons who are injured.  In Virginia, since the uninsured and underinsured motorist coverages are the same limit as the liability coverages, if someone runs into you who has no insurance and injures you, then you will be limited to recovering only $25,000 if that is your liability limit.   Certainly with hospital and other medical costs as high as they are these days, the minimal coverage limits of $25,000/$50,000 are almost certainly not enough to protect your interests if someone is injured in the accident.  If you cause an accident and an injured person sues you and gets a judgment against you that is over your policy limits, they will most likely garnish your wages, attach your assets, or seek the unpaid part of the judgment until the entire judgment has been satisfied.  Before uninsured and underinsured motorist coverages, the minimum limit might be enough for someone who had no real assets, but now higher limits are not only important for those who have assets or are gainfully employed, but for everyone.   Of course, you have to balance the likelihood of an accident involving more serious injuries with the cost of the higher limits.  At a minimum, I would suggest that you should have liability (and UM/UIM) coverage limits of $100/$300 or $250/$500.  Anything less, you’re putting your assets at risk whether you are at fault or if someone else is at fault and you are injured.   You may be surprised how little these higher limits will increase your premiums.  And remember to shop around.  Rates vary tremendously between different auto insurance companies.[3]

Of the optional coverages, I would recommend you purchase Medical Payments coverage.  This coverage will pay medical expenses when you are injured, regardless of who is at fault, and usually provides coverage for injuries resulting from any motor vehicle accident (regardless of whether you are riding a bicycle and get hit or run off the road by a motor vehicle; are injured while a passenger in someone else’s vehicle; or are even struck by a motor vehicle while a pedestrian).  Medical payments coverage also pays regardless of (or in addition to) any other insurance.   If you are injured in a motor vehicle accident and incur medical expenses, when you use your health insurance there are almost always co-pays and deductibles that result in you still paying a significant amount of money from your pocket.   Medical payments coverage will provide funds to help cover those expenses, so you may not have to pay anything yourself.   This is a broad coverage for a very small premium.   Limits are usually sold as $1,000, $5,000, or $10,000. Under Virginia law, you multiply the number of vehicles on the policy (up to four) by the dollar limit, so if you have a $5,000 limit and three vehicles on the policy, you actually have a $15,000 limit!

Under Virginia law, auto insurance companies have to offer medical payments coverage, but generally the insurance companies do not like to provide it.  I have often heard clients say, when I’ve asked them about medical payments coverage, something like: “Well, my insurance agent asked me if I had health coverage, and I told the agent that I did, and the agent said I didn’t need medical payments coverage”.

Other coverage to consider are collision, comprehensive, towing, substitute rental vehicle, and lost income.  While these coverages are generally good to have, you will need to decide whether the benefits they provide are worth the added cost.   Do yourself a favor and check your auto insurance policy and your coverage limits to make sure you are adequately protected.  If not, make changes to your policy today. Don’t wait.  Remember the old saying: “It is better to be safe, than sorry.”

[1] There are over 35 earlier blog posts describing insurance coverage on this blog; see https://www.allenandallen.com/blog
[2] This minimum has not changed in many, many years, while the cost of medical treatment and supplies has increased tremendously.
[3] The Virginia State Corporation Commission Bureau of Insurance has an excellent pamphlet entitled “Auto Insurance Consumer’s Guide”, at http://www.scc.virginia.gov/