Understanding insurance coverage following an accident is important, but it can be confusing. Every Texas driver is required by law to carry insurance for both property damage and bodily injury. However, the exact coverage available for a particular accident is solely dependent on what the insurance policy says. When reading through policy coverages, those unfamiliar with certain terms can get confused about what different coverages are for and what amounts they cover. Abbreviations such as PIP, Medpay, BI, PD, and UM/UIM are not exactly self-explanatory. To help clarify these things, here’s a quick rundown of the different types of coverage.
Liability Coverage
Liability coverage is the most basic type of auto insurance a person can buy. This type of insurance coverage is required by law in the State of Texas for both property damage and for bodily injury, which means that if you’re insured, you already have it! Liability coverage covers you in the event you are involved in a crash you caused. Property damage (PD) coverage compensates for the cost of vehicle repair or the fair-market value of the vehicle if it is deemed to be a total loss. In Texas, the minimum amount of PD coverage that must be carried is $25,000. This means that the policy will cover up to $25,000 in property damage. Any damage over this would not be covered by this policy.
Bodily injury (BI) coverage compensates for injury related damages, such as medical bills, lost wages, and pain and suffering. In Texas, the minimum amount of BI coverage that must be carried is referred to as a 30/60 policy. That means, your insurance company will provide up to $30,000 in coverage to any one person injured in the wreck and no more than $60,000 total for any one wreck, no matter how many people were injured in it. So the first number is the “per person” coverage. The second number is the “per accident” coverage. The coverage amount can be voluntarily increased, for example to 50/100 or 100/300.
Uninsured/Underinsured Motorist Coverage (UM/UIM)
Uninsured/Underinsured Motorist coverage (UM/UIM) is an optional policy that you can purchase in addition to your liability coverage. Texas drivers are not required to carry UM/UIM coverage, but we highly suggest getting it for this reason. Uninsured Motorist (UM) coverage compensates you for property and bodily injury damages when you are in a wreck that you did not cause with someone who is uninsured. Getting in a wreck with an uninsured driver is very frustrating. In 2022, the Texas Department of Insurance found that 13.8% of all drivers drove uninsured. Unless you have UM insurance, your only avenue for recovery will be to sue the uninsured driver, and the likelihood of ever recovering anything from that person is typically very low. However, if you have UM insurance you simply file the claim with your insurance carrier. The UM coverage amount can vary, but it is typically 30/60 or 50/100.
Underinsured Motorist coverage (UIM) compensates for accidents you did not cause where the at-fault driver has insurance but does not have enough to fully compensate for your losses (i.e., they were underinsured). For example, if you get injured and have damages of $100,000 but the at-fault driver only has a minimum limits liability policy of $30,000, then that person is underinsured by $70,000 to fully compensate you. After you resolve your claim with the at-fault driver for the $30,000, you can then file a UIM claim with your own insurance company to recover the underinsured amount. The UIM coverage amount can vary, but it is typically 30/60 or 50/100. We highly encourage people to carry UM/UIM coverage. If you are ever involved in a wreck with an uninsured or underinsured motorist you will wish you had it.
Personal Injury Protection (PIP)
Personal Injury Protection (PIP) is an optional coverage intended to cover out-of-pocket expenses related to a wreck (e.g., medical bills, lost wages, etc.). It is considered a “no-fault” coverage, meaning you can make a claim for it even if you were the cause of the wreck. The PIP coverage amount is typically much smaller amount than other coverages, usually between $2,500 and $5,000.
Medical Payments (MedPay)
Medical Payments (MedPay) is another optional coverage that is similar to PIP. MedPay covers medical bills that have accrued because of a crash. Similar to PIP, this coverage is typically between $2,500 and $5,000. The difference between PIP and Medpay is that Medpay will only reimburse medical expenses whereas PIP will reimburse medical and non-medical expenses. Additionally, Medpay has a reimbursement provision, which means that you may have to reimburse the Medpay carrier for benefits paid if you later recover money from the at-fault person’s liability policy. There is no such reimbursement right with PIP coverage.
In summary, it is important to understand the differences between coverages, the benefits of carrying the optional ones, and the risks if you don’t. If you have questions about what coverages are available to you after an accident, reach out to the experienced attorneys at The Daws Law Firm for assistance.