In our experience people purchasing insurance through an agent or over the phone
sometimes have little understanding of what they have purchased. Since Oregon
and Washington law requires that you carry insurance, it is important to know
what you have. Most policies have a Declaration Page which summarizes the coverage
you have just purchased. There are many abbreviations and numbers which we explain
below. The Declaration Page is followed by the fine print of your policy which
may be sent to you at a later time. You should read the policy immediately and
call your agent with any questions.
1. Liability Coverage. This is sometimes called “BI” for
bodily injury. Your BI only pays for someone else’s injuries, NOT yours,
if you are at fault for the collision. The other driver’s BI coverage pays
for your injuries if a collision was his fault. The minimum coverage requirement
is “25/50” which means that $25,000 of coverage is available for each
person’s claim per accident and $50,000 is available for all claimants combined
for each accident. These minimum coverage limits are generally inadequate and
expose you to personal liability for an excess damage claim if you hurt someone
else. Other common limits include “50/100” and “100/300”.
2. PIP (No Fault Medical Insurance). PIP is short for Personal Injury
Protection. This coverage is best described as medical cost coverage. It helps
you and your passengers in your own car, and potentially you or family members
when you are in another car or a pedestrian. This coverage pays for reasonable
and necessary medical bills (usually up to $10,000) for you and your passengers,
but also covers a percentage of your documented lost income and will help pay
for household help. This coverage is available regardless of fault and pays first
before your primary medical insurance.
3. UM/UIM (Uninsured and Underinsured Motorist coverage). This coverage
protects you if the person who is at fault for your collision has no insurance
or has limited liability (BI) coverage that will not cover your overall damages.
This coverage is very important because it is your way to protect yourself from
other people who are irresponsible regarding their own coverage. The policy limits
you maintain on your UM/UIM coverage will be the maximum you can collect if the
other person has no insurance so you should make sure you have plenty of this
4. Collision Coverage. This coverage covers your vehicle, minus the
deductible, for damage from a crash.
5. Comprehensive Coverage. This is property damage coverage for your
vehicle and other losses associated therewith.
6. Umbrella Coverage. This coverage is optional and starts where your
other coverages for UM and liability run out. It provides an additional layer
of coverage that can be used in case of losses that exceed your normal monetary
limit that is set forth in your policy. If you have a lot of personal assets,
this coverage is advisable.