How can you protect yourself and your family if you are involved in an auto accident? The best protection is to buy good auto insurance. However, most people do not know what is included in their auto insurance policy or how it protects them in the case of an accident. Everyday Law explores the menu of options in auto insurance policies.

There are three parts to an auto insurance policy; third party liability coverage, underinsured/uninsured coverage and med pay coverage. The three parts of an auto policy serve to protect you and others involved in an accident, provide sufficient coverage if you were involved in an accident with someone with insufficient or no insurance and assistance with medical bills as result of injury from an auto accident.

The State of Illinois requires that all drivers obtain third party liability insurance coverage. This means that if you cause an accident, you have insurance coverage for the other party in the accident. For instance someone who caused an accident may have minimal coverage; a 20,000/40,000 insurance policy. With such a policy, a maximum of $20,000 can be paid out per person, and a maximum payout of $40,000 for the accident. It would be better to have higher coverage, and best of all to have an umbrella policy on top of your auto insurance policy. Such an umbrella policy requires a minimum of 300,000/300,000 of auto insurance before an umbrella policy can be purchased. An umbrella policy would protect personal assets in the case of a lawsuit.

Additionally, third party insurance coverage carries with it the insurance company’s obligation to defend you in a lawsuit as a result of the accident. The insurance company will provide you with a lawyer in such a case.

What if you are not at fault in an auto accident and the other driver has only the aforementioned minimal coverage? Is there anything a person can do to protect themselves in such an event?  There is the option of suing the person who caused the accident, but it is likely a person with minimal coverage may not have many assets; that is you could sue and potentially win such a case, but if the other person does not have many assets, you probably will not recover much money. This is where underinsured/uninsured insurance coverage comes into play. Buying adequate underinsured/uninsured insurance coverage will protect you and your family against drivers with minimal or no insurance.

An example of how underinsured/uninsured coverage works is that if you are involved in an accident with a driver with minimal third party insurance such as a 20,000/40,000 policy, you may be able to recover $20,000 from that other driver. However, if your damages (medical bills, pain and suffering) exceed $20,000, you can recover additional money through your own underinsured/uninsured coverage of your own auto policy. One thing to note about such coverage is that there is an offset. That is, if you have $100,000 in underinsured/uninsured coverage on your own policy, the maximum amount of such coverage you can recover in total is $100,000. Thus, if you recover $20,000 from the other driver (maximum amount of their third party liability insurance), you can then only obtain $80,000 of underinsured/uninsured coverage from your own auto policy for a total of $100,000.

A third part of auto insurance coverage is the med pay provisions. This portion of coverage will help you cover any medical bills resulting from an auto accident. The amount of this coverage is generally not high as most people have health insurance their medical bills. However the med pay will help pay any co- pays, deductibles or co-insurance from health insurance.

The three parts of your auto insurance policy can help protect you and your family in the unfortunate event of an accident. Third party liability coverage will pay for any damage to the other party in an accident if you are at fault. Underinsured/uninsured coverage will protect you when the other driver at fault has insufficient or no insurance. Med pay coverage will help pay medical costs as result of an auto accident.