In This Economy, These 2 Car Insurance Coverages Are More Important Than Ever


As a car accident lawyer with more than 25 years experience, I know that there are two essential coverages that every car owner must have. They are more important than ever in today’s economic climate.

Car insurance coverages can be complicated, I know. Shopping for car insurance can be a frustrating task, likely because you don’t understand the concept. This topic is confusing, boring, and not fun to contemplate. It’s not something you should ignore.

Let me see if I can help.

First, a quick refresher – Car Insurance 101. These are the major insurance coverages and what they do…


– You are responsible for any property or injury damage that you cause.

Uninsured motorists (UM).

– In case you are hurt by a driver without insurance, you will be paid

– If you are hurt by a driver without enough insurance, will pay you .

Personal Injury Insurance (PIP).

– This coverage is the primary in all 12 no-fault states. It covers you your medical bills and income loss after a car accident. It is available as an optional coverage in some states that have fault insurance.

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Covers medical expenses incurred due to a car accident.


If your car is in an accident with another vehicle or object, you can pay to have it repaired.


– This policy pays to repair your car if it has been damaged by specified causes other that a collision such as theft or accidental glass breaking.


– Covers the cost of towing your vehicle if it becomes disabled.

Rental Reimbursement

– Covers temporary rental costs while your car is being fixed.

Which 2 are the most important?

Liability Insurance

First, liability. This coverage covers you if you cause an accident. You will be responsible for any damage you cause if you don’t have the insurance.

If you’re distracted by your daydreams or glance at the radio dials and fail to see that the car in front has stopped, you can be held responsible for any damage you did. The car must be repaired and anyone injured must be compensated.

You have liability insurance to protect yourself from paying a large sum. Your insurance company will cover any damage you cause or your policy limit.

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This seems like a simple decision. Isn’t liability insurance mandatory in all states?

Almost. You must have liability insurance in forty-eight states. (To see which states don’t require liability insurance, please read the article to the end.

Don’t let the economic downturn convince you to cancel your car insurance. Instead, take your chance. It is not a wise gamble.

You should not only keep your liability coverage but also ensure that you have sufficient coverage.

Don’t you want to ensure that all harm you do is covered? You want to ensure that any serious harm you cause another person is fully compensated. It’s just right! This coverage also protects you from having to pay any potential high court judgments yourself.

Your individual circumstances will determine how much liability insurance you require. The minimums required by the state are way too low. If you have the means to afford it, you should have at minimum $100,000 in personal injury liability coverage. You also need $50,000 property damage liability insurance. This covers you for any damage to cars or other property.

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Talk to an insurance agent you trust about the “how much” question.

Coverage Motorists Uninsured and Underinsured

uninsured motorcyclists coverage or its cousin, underinsured motorcyclists coverage, can help you avoid a catastrophe if you are involved in a car accident caused by someone else.

Uninsured motorists covers you if someone with no insurance causes harm to you, your family or property. This covers hit-and-run drivers.

You might be wondering why uninsured motorists coverage should be so important, even though all drivers (except those in the two unidentified states) must have liability insurance.

This is because many drivers don’t have liability insurance even though almost all states require it.

A study by the Insurance Research Council found that nearly 15% of drivers were uninsured as of 2004. In some states like Arizona, California, and Mississippi, nearly 25% of drivers were not insured.

Even worse, several hundred thousand drivers are estimated to have dropped their insurance over the past year due to the rising unemployment rate and the economic downturn.

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Uninsured motorist coverage is required in about half of the US. Even if it’s not, I recommend that you get it.

Get as much coverage for uninsured motorists as you can afford. You will find that your liability insurance limits you in many states. This means that you can only purchase the amount of uninsured motorists coverage you have.

Uninsured motorists coverage can also be used in some states as coverage for underinsured drivers. They are different coverages in other states. If someone has insurance, but not enough, underinsured motorists will cover you.

If you are involved in an accident that results in damages of $100,000, but the other driver has only $15,000 worth of liability insurance…and no assets to pay you…you will be out of luck unless your coverage includes underinsured motorists. This coverage pays the driver who isn’t covered by your policy, up to your policy limit.

A Wall Street Journal article recently stated that adding coverages for uninsured or underinsured drivers to your policy can increase your insurance premium by 7 to 9%. This coverage can be a lifesaver if you’re hit by an financially reckless driver.

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Today’s economy is characterized by more drivers dropping their car insurance coverages or cancelling them altogether. It is crucial that your policy includes uninsured/underinsured motorists coverage.

This should make car insurance coverages easier to understand.

The answer is no, only New Hampshire and Wisconsin don’t require car insurance. They require drivers to prove their financial capability to pay for damages.