Automobile Insurance – FAQs
AUTOMOBILE INSURANCE COVERAGE
1. WHAT IS AUTOMOBILE LIABILITY INSURANCE COVERAGE?
If a claim is made against a person or entity who causes personal injuries or property damage to another person in a motor vehicle collision, the type of insurance that will be looked to in order to compensate the victim is known as liability insurance. The maximum amount of money that will be available to the injured party under the responsible party’s insurance policy is the amount specified in the limit of the liability coverage under that policy.
2. WHAT IS THE DIFFERENCE BETWEEN SPLIT LIMIT AND SINGLE LIMIT LIABILITY INSURANCE COVERAGE?
Liability insurance coverage normally is available in Connecticut in two different forms: (1) single limit coverage, and (2) split limit coverage. Split limit coverage means that a certain maximum amount of coverage is available for each person injured in a collision with a maximum amount available no matter how many people are injured in the collision. Single limit coverage means that a certain amount of insurance coverage is available per collision with no special amount allocated per person.
Example: A policy that provides a person who is legally responsible for the collision with $300,000 of coverage could be written by the insurance company as single limit coverage of $300,000 or as split limit coverage of $100,000 per person with a maximum of $300,000 for each collision ($100/300,000). If two people are injured in a collision, then the $300,000 in the single limit policy could theoretically be allocated in any amount so long as the total does not exceed $300,000. If the same two people are injured but the policy has the split limits listed above, then each person is limited to a $100,000 maximum recovery with the total payable as a result of the collision being $200,000.
The difference between single limit and split limit becomes very important when one or more persons in a collision is severely injured and the amount of the injured person’s claim is more than the single limit per person maximum but less than the per collision maximum amount.
3. IF I AM INJURED IN A MOTOR VEHICLE COLLISION, WHO PAYS MY MEDICAL BILLS THAT I INCUR BEFORE I RESOLVE MY CASE AGAINST THE PERSON RESPONSIBLE FOR CAUSING THE COLLISION?
The laws in Connecticut were changed substantially in 1994. Prior to 1994, most medical bills, up to the limit stated in the insurance policy, were paid under each automobile policy under what was known as No-Fault Insurance regardless of who was at fault in the collision. The law now is that a person’s health insurance policy is primarily responsible to pay such medical bills unless the insured person has bought certain special coverage under his own policy. Such special insurance is known as either Medical Payment Benefits (“Med Pay”) or Basic Reparations Benefits (“BRB”).
4. HOW DO THESE SPECIAL PROGRAMS SUCH AS MEDICAL PAYMENT BENEFITS (“MED PAY”) AND BASIC REPARATIONS BENEFITS (“BRB”) WORK?
Both of these types of coverage are similar to the former No-Fault coverage with the medical bills being paid through the insurance carrier up to the maximum of the coverage in the particular policy. The difference between BRB and Med Pay is that BRB will also cover some of the lost wages incurred by the injured party in addition to medical bills up to the injured party’s maximum coverage, while Med Pay only pays for medical bills.
5. WHAT HAPPENS IF THE PERSON WHO CAUSES THE COLLISION EITHER HAS NO INSURANCE OR NOT ENOUGH INSURANCE TO COVER THE FULL EXTENT OF MY CLAIM UNDER THE LAW?
The law provides that a person injured in a collision in which the injuries are caused by the negligence of another person or entity can recover his medical bills incurred, lost wages, medical bills that will likely be incurred in the future, and a fair and just amount for pain and suffering. (If the person dies, other recovery can be obtained under the wrongful death statute.) If the responsible party does not have insurance to pay these damages or has inadequate insurance, then the injured party can look for recovery from his own uninsured motorist coverage.
6. HOW DOES UNINSURED MOTORIST COVERAGE (“UM COVERAGE”) WORK?
UM coverage can be somewhat tricky; therefore, a careful review of the insurance policy for the injured person must be made in order to understand how much coverage, if any, is available in each collision. Essentially, UM coverage fills in the gaps where the liability policy of the responsible party falls short of the injured party’s claim, if, and only if, the UM coverage under the injured party’s insurance policy exceeds the limits of the liability insurance coverage of the responsible party. If UM coverage applies, then such UM coverage will only be available to the injured person to the extent of the excess of UM coverage over the liability coverage of the responsible person.
Example: Assuming that the responsible party has $20,000 in liability insurance coverage, that the injured party has a claim legally worth $80,000, and that the UM coverage under the injured party’s insurance policy is $80,000 or more, then the injured party’s UM coverage will pay $60,000:
$80,000 – $20,000 = $60,000.
However, if the responsible party has $20,000 in liability insurance coverage and the injured party also has only $20,000 in UM coverage, then the injured party will only receive the $20,000 from the responsible party and nothing from his own UM coverage:
$20,000 – $20,000 = $0.
7. WHAT IS UNINSURED CONVERSION COVERAGE?
Uninsured Conversion coverage (“Conversion UM”) is uninsured motorist coverage that is an additional coverage for the injured party who suffers injuries as a result of a responsible party who has no insurance or insufficient liability insurance coverage. No matter how much insurance the responsible person has, the injured party will have additional coverage that can be added on to the coverage of the responsible person. Thus, in the example just shown above where the responsible person had $20,000 in liability insurance coverage and the injured person had a claim worth $80,000 and Conversion UM coverage of $20,000 (as opposed to non-Conversion UM coverage), the injured person would receive a total of $40,000 (i.e. $20,000 from the responsible party’s coverage plus $20,000 from the Conversion UM coverage).
8. HOW MUCH UNINSURED CONVERSION COVERAGE CAN I PURCHASE UNDER MY OWN INSURANCE POLICY?
Each insured can purchase up to two times his own liability coverage in the form of Conversion UM coverage. It can only be purchased in the same manner as your liability coverage; therefore, coverage will be either split limit or single limit depending upon the form of your liability coverage. Thus, if you have a $300,000 single limit liability policy, you can purchase $600,000 in conversion UM. If you have a split limit liability policy of $100,000 per person and $300,000 per collision, then your Conversion UM coverage can be up to a maximum of $200,000 per person and $600,000 per collision.