Any time you purchase auto liability insurance, the agent is required by law to offer you uninsured/under insured motorist coverage and personal injury protection (PIP). If you turn either coverage down, they must get your signature on a rejection form. The reason these coverages must be offered is that they are the best protection that a driver can buy for himself and his family. Thus, it is important to understand what they are, how they work, and how they differ from simple liability insurance.
Liability insurance is coverage that protects you from liability for your own negligence. If you cause an auto accident and a claim is made against you by anyone injured in the accident (including people in your own vehicle), liability insurance is what obligates the insurance company to provide you with a defense attorney to represent you in the event of a lawsuit and to pay a judgment up to the amount of your liability limits for which a jury determines you liable. There is no maximum amount of liability coverage you can purchase to protect you and others whom you allow to drive your vehicle. The Texas Legislature sets the minimum amount you must carry by statute. That minimum is currently $30,000 per person up to a total of $60,000 per accident for bodily injury and $25,000forproperty damage.
Liability insurance follows both the persons named and the named vehicles for authorized non-excluded drivers. This means a named insured has coverage whether he/she is driving the covered vehicle or even another vehicle. The vehicle named in the policy is also covered if a covered driver gives permission to another person (who is not excluded under any other provision) to drive the vehicle.
Uninsured/Under Insured Motorist Coverage
Uninsured motorist insurance coverage is coverage that you buy to protect you and people in your vehicle in the event that an uninsured driver causes an accident with you. You insurance company basically stands in the shoes of the other driver and provides coverage up to whatever limits you buy. You still must prove that the uninsured driver caused the collision and what the fair value of the damages are as determined by a jury.
Under insured motorist coverage is coverage that protects you when the other driver has insurance, but does not have enough to cover all of your damages. For example, say you take your case to trial and the jury finds that fair and just compensation for your damages is $50,000, but the other driver only has $30,000 in coverage. Your under insured motorist coverage would kick in to pay the additional $20,000.00.
Uninsured and under insured motorist coverage are sold as a package. There is no minimum required so long as they get a signed rejection of coverage from you when you buy your insurance. There is a maximum amount you can purchase. You cannot buy more uninsured/under insured coverage than you buy in liability coverage. The idea behind this is that you must cover everyone else for the same amount you cover yourself for. If you would like more information on uninsured and under insured motorist coverage, please visit the Simmons and Fletcher page on the subject here.
Personal Injury Protection (PIP) Coverage
Personal injury protection coverage is another form of insurance that you must sign a written rejection in order not to receive it. It is generally sold in very small policy limits of $2,500 or $5,000, but is sometimes as much as $10,000 or even $50,000. Personal injury protection is effectively no fault insurance designed to protect you and anyone in your car if you are in a wreck. You must only show that you were in an auto collision and incurred medical expenses or lost income. Personal injury protection coverage is relatively expensive in comparison to other types of coverage, but it is absolutely the best type of coverage you can have since you do not have to prove liability to recover it.
For more information, here is another great article you can read about this subject: