PIP, BI, UM, and MedPay. It's like the alphabet soup of car insurance policies. They're all different and they can all benefit you in different ways, and choosing the right one is important and requires an understanding of the policy's protections. For example, whether or not you caused or were the recipient of a car accident, Personal Injury Protection (or PIP) will cover--up to the limits of your policy--you, others using your car with your permission, your child while on a school bus, and you while a passenger in someone else's car or as a pedestrian involving another motor vehicle. This is a mandatory policy in "no-fault" states--currently there are 12--and in the state of Florida, this is also referred to as Florida No Fault Insurance. In Florida Statute 627.736, it says that every insured car owner must have coverage up to a $10,000 limit.
Bodily Injury Liability (also called BI) is another story entirely. If you caused the auto accident and a serious or permanent injury or death resulted in the other party, BI may cover that. Your company will also appoint you a motor vehicle accident lawyer should a lawsuit be filed against you. With BI, it's important to remember that selecting low limits to your policy could put you at financial risk down the road. If the damages of the car accident exceed your limits, you will be held responsible for the amount above your limits. To avoid this, account for both your current and future net worth when deciding on the limits of your coverage.
On the other hand, plenty of uninsured drivers are on the roads today. So what if the car accident was caused by the other party and they had no insurance, or it was a hit-and-run? UM would be the proper choice (hence the name Uninsured Motorist coverage). This policy would cover you and your passengers for bodily injury, damages, or death. Details on uninsured motorist laws can be found at . This might be an important policy for you if you don't have health insurance as medical bills will be taken care of. If you do have a comprehensive health insurance plan involving your family or a group, uninsured motorist coverage may not be necessary. Make sure to review the terms and conditions of all your insurance policies to ensure that you don't buy coverage you don't need.
MedPay (or sometimes called Medical Payments coverage) is a policy that only covers medical bills to you or any passenger injured in your vehicle. This type of insurance covers you and your passengers regardless of the fault, and it also covers the policy holder and holder's family if they are injured as a passenger in another car or as a pedestrian on foot or on bicycle. If you live in a no-fault state, such as Florida, that requires PIP coverage, MedPay may be unnecessary, because PIP may cover other losses as well as medical bills. Comprehensive plans like PIP that cover medical costs may make MedPay an unneeded addition to your car insurance policies.
In the case of any of these car insurance policies, the mantra is the same: understand the terms and conditions. Some may be mandatory in your state and others may be entirely unnecessary. If you are employed, some of these coverages may be required by your employer.
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