Coverage for Your Passengers when You're at Fault

[sideshowmel]

Hello,

I've been doing some research and I've found that Bodily Injury Liability doesn't cover the passengers in your car if you're at fault in an accident (I don't live in a "no fault" state, so I don't know if it would be any different in those states). Your passengers would be covered by the Medical Payments portion of the policy (I don't live in a PIP state either).

The problem I see here is that options for Medical Payments coverage are much more limited than options for Bodily Injury Liability. For example, Med Pay coverage typically only goes up to 25 or 50k where as BI coverage goes up to hundreds of thousands of dollars. I have health insurance, so I'm not worried about myself but I have no control over whether my passengers have their own health insurance. It's easy to imagine an accident causing medical treatment costs to exceed 25 or 50k by quite a bit and if that happened to my passengers and they didn't have their own health insurance (or their health insurance wasn't adequate), I could be on the hook for the excess.

Can anyone explain why auto insurance policies are designed this way? Seems like it leaves you exposed to some large liability amounts. Or am I just missing something?

Thanks.

 

[sideshowmel]

Oh well, it was worth a shot. I didn't get any good answers from discussions with agents or customer service reps either.

I suspect that I've stumbled upon a hush-hush topic in the world of auto insurance. Definitely doesn't improve my opinion of the business, including the people who work in it.

 

[Josh]

Oh well, it was worth a shot. I didn't get any good answers from discussions with agents or customer service reps either.

I suspect that I've stumbled upon a hush-hush topic in the world of auto insurance. Definitely doesn't improve my opinion of the business, including the people who work in it.

You're asking the wrong audience. Call up the respective state insurance department if you want more details. You might also want to look at umbrella coverage.

Nothing hush hush about it, just more of a philosophical question being presented to the wrong group.

Or we're a bunch of scum, your choice.

 

[BlockO]

Med Pay coverage typically only goes up to 25 or 50k

some non-standards cap their med pay off at 5 or 10K.

and btw, there is exposure in the no-fault states as well (except for MI, which has unlimited medical benes).

like Josh said, umbrella is the simplest solution.

 

[Josh]

I believe Virginia is cut off at 10k regardless.

 

[sideshowmel]

I appreciate the response but I don't think it's being presented to the wrong group at all. Why wouldn't agents know why the policies they sell leave a significant hole in coverage? It's bad enough that most (all?) don't even mention to their customers that the hole is even there.

 

[reductable]

Hello,

I've been doing some research and I've found that Bodily Injury Liability doesn't cover the passengers in your car if you're at fault in an accident (I don't live in a "no fault" state, so I don't know if it would be any different in those states). Your passengers would be covered by the Medical Payments portion of the policy (I don't live in a PIP state either).

The problem I see here is that options for Medical Payments coverage are much more limited than options for Bodily Injury Liability. For example, Med Pay coverage typically only goes up to 25 or 50k where as BI coverage goes up to hundreds of thousands of dollars. I have health insurance, so I'm not worried about myself but I have no control over whether my passengers have their own health insurance. It's easy to imagine an accident causing medical treatment costs to exceed 25 or 50k by quite a bit and if that happened to my passengers and they didn't have their own health insurance (or their health insurance wasn't adequate), I could be on the hook for the excess.

Can anyone explain why auto insurance policies are designed this way? Seems like it leaves you exposed to some large liability amounts. Or am I just missing something?

Thanks.

You're asking a question that has too many state specific variables but my take on it is med pay is never intended to be primary. It just pays for a funeral where health insurance would not. And if work comp should apply, med pay does not.

Because the med pay coverage on the PAP does not reduce the limit of liability, has no limit on number of passengers, no aggregate, no vehicle limitation... if higher limits were available, insurance carriers would be on the hook for millions easily. Let them start accounting for the unknown and we all will start to pay for it in our PAP premiums.

If passengers in your car are covered as insureds on their own policy they could claim med pay and/or underinsured motorists on their own policy (in my state, VA).

 

[Josh]

I appreciate the response but I don't think it's being presented to the wrong group at all. Why wouldn't agents know why the policies they sell leave a significant hole in coverage? It's bad enough that most (all?) don't even mention to their customers that the hole is even there.

You're making some pretty wild accusations here. Many agents do explain the gaps in coverage to their clients. Most clients don't want anything but the bare minimum, but that doesn't mean the agents aren't explaining it.

The passengers may be able to make an uninsured/underinsured motorist claim on their own insurance as well.

I think you don't care for insurance companies and agents to begin with so you're attacking the industry on an issue that isn't the fault of anyone on this forum.

Again, I wasn't joking when I suggested you call your respective department of insurance. If they cared they could make it a no-fault state like NY. Coincidentally the cost of the insurance will go up for everyone, but it would mean everyone is covered.

Again, take a look at an umbrella policy if that's something that keeps you up at night.

 

[fcorcoran]

It is a good question, and I see where you are coming from. The most that most policies in Arkansas offer is 10,000. I dont know about other states. Umbrella is the fix all. Just like a few have said.

 

[BlockO]

I believe Virginia is cut off at 10k regardless.

yep... compare that with the other extreme.... Michigan requires unlimited medical that is named as primary unless the driver shows proof of health insurance. auto insurance covers up to 500K, a state catastrophe fund kicks in after that.

that's the problem sideshowmel. each state is different as night and day. and unfortunately, I don't know a thing about Georgia insurance laws. I only know a few agents on here from GA, and they are all on the life and health side.

in MOST states, you are right. there is definitely an exposure. which is why it's important to offer the umbrella (especially parents with high school aged kids).

"Can anyone explain why auto insurance policies are designed this way?" .... that you would have to ask the insurance execs and lawmakers. We sell the policies, but we don't write them. I'm sure like most anything else, if you dug down to the WHY, I'm sure money and lobbying had a lot to do with it.