Insurance is very important for every business and individual. The main purpose of insurance is to offer protection to a business and individuals against unforeseen financial losses. There are certain types of insurance such as auto insurance that are mandatory for every business or individual.
Other types of insurance are optional but highly recommended. Some people hesitate to purchase insurance because of the cost associated with it. However, in most cases, the benefits that come with having an insurance cover outweigh the cost.
Car insurance is generally designed to protect you from financial liability in case you or your vehicle gets involved in an accident. Other than absolving you from the financial liability of another car, the insurance company is also obligated to replace or repair your own car after an accident.
Nonetheless, car insurance is somewhat complicated – it doesn’t just cover any type of accident. A car insurance policy comprises several components that provide different types of protection.
The backbone of all auto insurance policies is referred to as personal liability and property damage insurance (PLPD).
Liability insurance is categorized into two. The first one is bodily injury that caters to medical bills for anybody injured during an accident caused by your vehicle. The second category is property damage that covers expenses related to the repair of a damaged vehicle. Any time you see PLDP, just remember those two parts or categories.
PLPD is an acronym for Personal Liability and Property Damage insurance. Although it is a commonly used term, the meaning can totally change depending on which state you come from.
However, its basic understanding is that your car insurance cover has the minimum types of coverage mandated by your state. Almost every state legally requires motorists to carry PLPD insurance.
Here is a summary of what is referred to as a full coverage policy:
• Bodily injury liability: part of the liability that insurance that that pays hospital bills in case you have injured someone in an accident.
• Property damage liability: Part of the liability insurance that pays for property damage caused during an accident
• Underinsured/uninsured motorist: This is part of the cover that pays for medical bills or damage in case the accident was caused by a person who has little or no insurance
• Collision: pays for the damage to your car, regardless of who caused the accident.
Also known and liability insurance, PLPD is an element in auto insurance that takes care of the costs in case you are the one who caused an accident. For instance, if you hit another car from behind, and caused an accident, then you will be considered the at-fault party.
After all the necessary steps after an accident have been followed such as exchanging contacts and details of your insurance companies, the other driver will launch a claim with your insurance company. Here is where your PLPD insurance cover comes in.
Your insurance company will be obligated to pay for the repair of the vehicle together with medical expenses associated with any injuries caused by the accident.
However, you should understand that the insurance company will only pay for the injuries and damage up to the limit of your policy. When purchasing an insurance policy, you are always given several options and asked to choose the amount of liability you would wish to be covered.
Below is an example of a car insurance policy and amount limits:
Property damage liability - $ 40,000 for every accident
Bodily injury liability - $40,000 for every person and $100,00 for every accident
Uninsured/underinsured motorist - $40,000 for every person and $100,00 for every accident
Personal injury protection - $10,000 for every person
Collision - $400 deductible
Comprehension- $400 deductible
In general, your liability caps the amount your insurance company will pay in terms of bodily injury and vehicle damage.
For example, if you cause an accident and the total cost of property damage and medical bills add up to $$50,000, but the coverage limit for your liability insurance is $40, then you will have to pay the balance from your pocket.
That’s why it is recommended that you set your liability coverage limits a bit high so that you aren’t caught up in such cases during an accident. But bear in mind that the higher the coverage limits, the higher the insurance premiums. You should therefore know how to balance the two.
You may require both parts of the coverage depending on the type of accident you get involved in.
Personal liability is basically meant to cover lost wages, injuries, pain and suffering caused to passengers, pedestrian or a driver during an accident.
Liability coverage is normally written in form of a fraction on your insurance policy document. The figures show the maximum amounts to which the insurance company will cover you should an accident happen. These are also known as split limits.
The first number is the maximum amount that you are supposed to be paid by the insurance company. The second number is the limit amount that should be paid out per accident.
All vehicle insurance policies generally contain property damage. This coverage becomes operational if your vehicle leads to damage of property in case of an accident. Some of the properties may include:
• Other vehicles
• Street posts and lamps
• Walls or fences
The two parts of the policy are clearly indicated in the policy document plus the amount that each one covering. You should ensure that you understand each part before purchasing the insurance cover. Most of the time the insurance company will recommend a cover that is in line with your budget.
As mentioned earlier, if the coverage limit is high, it means you will also pay higher monthly premiums. It is important to do your math and ensure that you choose a coverage that you will be comfortable to pay every month or every year.
Not all coverages are part of personal liability and property damage insurance. Here are some of the insurances policies that are separate from PLPD:
Collision coverage pays for the cost of repairing a car damaged during an accident. The insurance company will only pay after ascertaining that indeed it the damage was caused by an accident involving your car.
That is why it is always important to contact your insurance company immediately you get involved in an accident. The company will definitely send one or two of their agents to confirm about the accident and give back a detailed report for further appropriate action.
Collision coverage is optional and comes in four different types that include the following:
• Standard collision coverage
• Broad form collision coverage
• Limited collision coverage minus a deductible
• Limited collision coverage with a deductible
property coverage pays for the damages or repair costs caused to all the several vehicles involved in the accident plus those injured or killed. It also covers the injury case to an animal such as a deer.
Mini-tort coverage normally covers for damages caused to vehicles that don’t have insurance. That is why it is referred to as a mini-tort claim. However, every state has its own policies regarding this coverage. There is no general policy that is dictated to motorists.
A comprehensive coverage caters to repairs expenses for a vehicle or truck damaged after an accident. It however doesn’t cover damages that are caused by vandalism, flooding, hail, fire, or theft. The insurance company will only compensate the owner of the vehicle after verifying the cause of the damage or the injury.
The amount of personal liability and property damage you require depends on the state you reside in. Every state has its own method of determining the amount of PDLP that every person requires. But there are typically three numbers used by most states.
These are the dollar amount needed for bodily injury per person, per accident, and coverage for property damage.
For instance, the state of New York has a 25/50/10 PDL criteria. This means that drivers or vehicle owners must have:
• $25,000 worth of personal injury liability per person
• $50,000 personal injury per accident
• $10,000 property damage per accident
This is where the PLPD requirements revolve around for most states in terms of the amount to be paid by motorists. However, the amount can go up or lower depending on several other factors considered by each state.
In Michigan, all drivers are required to have coverage of up to $20,000 for bodily injury per person, $40,000 medical expenses per person, and $10,000 for property damage. There is also some PIP amount charged by the state.
There are generally three states that are referred to as no-fault states. If you live in such a state, you will be required to pay form medical bills from your own pocket irrespective of who caused the accident.
Nonetheless, the at-fault driver will still be held responsible and required to pay for any property damages. As such, no-fault states may not necessarily mandate you to have personal liability (PL)insurance but only property damage (PD).
Last but not least, there are some two states where you can drive without auto insurance. This includes New Hampshire and Virginia. In Virginia, you can pay an annual uninsured fee of $500 to drive without an insurance cover. But in New Hampshire, all you have to do is to prove that you can pay for damages or injuries in case of an accident.
All in all, most state-required amounts tend to be lower. This may leave you vulnerable and drain your finances in case of an accident. Always remember that the insurance company will only pay to a certain limit indicated in your insurance policy.
Working with an independent insurance broker can help you determine the right amount of personal liability and property damage insurance to have. The type of car or vehicle you can also play a role in determining how much exactly is needed to cover you properly.
According to statistics from the National Association of Insurance Commissioners (NAIC), the average insurance premium in the United States is six hundred dollars. But it is important to note that cost varies from one state to another. There are states that charge exorbitantly while others have reasonable rates.
Here are some of the factors that will affect the cost of your PLPD insurance:
• Marital status
• Credit history
• Make or model of the vehicle
• Driving record
• Safety features installed in a vehicle
Most people who are new to driving only consider buying PLPD at the beginning to minimize the cost of insurance.
However, the best thing to do is to identify a reliable insurance company that understands your financial needs. They will be able to offer you a good PLPD cover at reasonable rates.