Car Wreck Insurance: Frequently Asked Questions

Car Wreck Insurance – understanding a car insurance policy

What kind of insurance do I need before the car wreck happens?

Most people don’t understand automobile insurance policies. As a matter of fact, most attorneys do not either. An automobile insurance policy is a legal contract; a contract between you and your insurance company to protect you in case of a car accident. In addition, the terms of that insurance contract act like a photograph when a car accident occurs. You can’t add anything to that photograph once the accident occurs and the insurance company can’t take anything out of that photograph either. So the most important question is what kind of automobile insurance do you need, to protect you and your family, before the car wreck ever occurs?

How do I read a car insurance policy?

The first step is to understand how your read an automobile insurance policy. Most automobile insurance policies will have what is known as a declarations page. The declarations page is a brief summary of your insurance coverage and it will usually contain terms like “bodily injury” or “uninsured motorist coverage” followed by numbers such as 25,000/50,000 or 100,000/300,000.

In regard to these numbers, the first number, 25,000 for example, represents the maximum that insurance company will pay out to any one person under that coverage. The second number is the maximum that insurance company will pay out to everyone injured in the car wreck no matter how many people might have been injured. So now that we know how to read the declarations page, the question becomes what kind of insurance coverage do we need to protect our families?

What kind of car insurance protects my family?

All insurance policies will have what is known as “bodily injury coverage” or “liability coverage”. This coverage applies when you were at fault for the car wreck. In essence, it means that your insurance company will defend you from the claims presented by the injured person(s) in the car wreck. However, what about protecting your family from a car wreck that was not caused by your or a family member?

For car accidents that were not your fault, your automobile insurance policy should have the following insurance coverage to make sure you and your family are protected: 1) no-fault coverage; 2) uninsured motorist coverage and; 3) underinsured motorist coverage.

What is Kentucky No-Fault Insurance?

In Kentucky, the no-fault coverage is automatic. It essentially provides everyone in your vehicle with $10,000 of medical expense and lost wage coverage, no matter who caused the car accident or how it occurred. So yes, even if you are at fault for the car accident, you can make a claim against your no-fault insurance for your medical bills up to $10,000.

Reserving PIP (No-Fault Insurance)

I gave the below advice to a friend who was not sure whether she wanted to hire a personal injury attorney. It would apply for a car wreck, occurring in Kentucky, wherein there is a concern that the Emergency Room bill may be more than the no-fault coverage.

I advised her that she probably needed to call her insurance company and reserve her PIP/no-fault benefits for now. In short, if the ER bill is high (e.g. $15,000), it would eat up all her PIP coverage. In which case, there would be no PIP left to pay for her physical therapy or chiropractic treatment.  So. she may want to reserve her PIP for now, use the PIP for her other treatment, let the health insurance pay those charges and deal with the health insurance at the time of the settlement of the personal injury claim. The health insurance will have a subrogation claim against her personal injury claim for any amounts they pay out on her behalf but, we can resolve that when her injury claim is settled.

Why do I have to use my car insurance, for a Kentucky car accident, when I was not at fault for the car wreck?

If you are making a personal injury claim, you need at least $1,000 in medical bills to pursue a claim for pain and suffering.  You don’t have a choice but to use your car insurance which is the PIP or no-fault carrier.

Basically, PIP coverage, and to very much oversimplify it, means you have $10,000 of health insurance coverage through your car insurance, no matter who caused the car wreck.

In exchange for that legal right, you gave up the right to recover the first $10,000 in medical bill from the at-fault party and that legal right was transferred to the PIP carrier; since they are responsible for your medical bills. So, if your health insurance pays the medical bills instead of your automobile insurance, they have a subrogation claim against the personal injury claim.  This means they have the right to recover what they paid from your personal injury settlement. Essentially, to not use your no-fault insurance, would mean you are not recovering your medical bills from the at fault party and are paying them out of your personal injury settlement.

To explain it another way, here’s a brief video explaining the health insurance lien, covered above.

What is Uninsured and Underinsured Motorist Insurance?

Uninsured motorist coverage provides you with the means of presenting your personal injury claim, against your own insurance company, when the at-fault driver was operating his vehicle without insurance in violation of the Kentucky traffic laws. Underinsured motorist coverage provides an extra layer of insurance coverage. Essentially, when the at-fault driver does not have enough insurance coverage to satisfy the full value of your personal injury claim, underinsured motorist coverage allows us to make a claim against your own insurance coverage for additional funds, even though we have recovered all of the insurance coverage on the at-fault driver.

What is the best car insurance to have?

A good car insurance policy should have at least 100,000 per person of uninsured and underinsured motorist coverage.