If you are in an automobile accident, and you aren't hurt, you might breathe a sigh of relief. But, what about that phone pole? What if you hit a guard rail? Expenses like these can get pretty hefty before you know it.  Who is going to pay for it? The answer is that your insurance company will pay for it (up to a certain amount) under compulsory coverage in Part 4 of your insurance policy.

Your insurance company must pay for property damage if the accident is your fault or the fault of your household member's, or if someone else is using your car with your consent. Of course, there are exceptions:

  1. there's no coverage if you're using your car as a taxi;
  2. there may be no coverage in certain circumstances if you're using your car in your business;
  3. there's no coverage if a household member regularly uses the car, but you didn't pay for additional coverage;
  4. there's no coverage for your car
  5. there's no coverage if someone doesn't have the consent of the owner.

Once you establish that your insurance company will pay, there is the equally important question of how much they will pay. There must be at least $5,000 in coverage under this section, but absolutely should buy higher coverage, as the premium increase is tiny. However, if you're drag-racing or doing some similar activity, your company will not pay more than $5,000. Also, if someone else is using your car and has insurance, their insurance will pay first, and yours will be secondary.

When you're choosing coverage under Part 4, since it is compulsory, the only question is how much coverage you elect to have. For many, $5,000 simply isn't enough, as an automobile accident can cause much, much more damage, especially if you hit another car.

You also should be alerted to the fact that the Division of Insurance is allowing individual insurers to change coverages by contract. Therefore, while premiums may be different accross companies, coverage may also be different. So, in saving a few dollars, you may find out only too late that you are not insured for a loss as you thought you might have been.  You and your agent should sit down and go through the potential expenses of an automobile accident and choose the right coverage. If you have questions, feel free to call Marcotte Law Firm.