Understanding Auto Insurance: First Party Coverage

First party coverage pays you.

We have already discussed 3rd party coverage which (Pays the other person).

Now, we will break down the 1 st party coverage (pay me) as well as suggest some research to do before selecting your insurance carrier. Before we dive into the 1st party coverage, let’s talk a bit about Personal Injury Protection (PIP) coverage.

Make sure you have Personal Injury Protection.

PIP is designed to make is easy to collect money for medical bills and lost wages without the hassle of hiring a personal injury lawyer, although you can have a lawyer help you make a claim for a fee. You have the option to waive PIP, but we do not suggest waiving PIP because it can provide coverage for medical bills and lost wages. Keep in mind, just because you are injured in an accident doesn’t mean you are entitled to 100% of your coverage.

Typical coverage increments start at $2500, and usually max out at $10,000. A great website for information on Maryland PIP is (http://marylandpip.com/).

Do you really need that comprehensive coverage?

Now let’s discuss 1st party coverage and the policy structure. Let’s examine Comprehensive coverage which covers damage to your vehicle for anything other than collision. Examples include, wind, vandalism, theft, falling objects, just to name a few. Collision coverage differs from comprehensive in that it covers a collision with another object, such as a telephone pole, another vehicle etc, both comprehensive and collision you can select different deductibles.

Questions you would want to ask when selecting your 1 st party coverages are, “When I leave this office and wreck my car what out of pocket expense would I be comfortable paying?” and  “How much is my car worth, and if I were to total it would the Kelly Blue Book Value be worth the premium I am paying for coverage?”

For example, if your car is only worth $1,000 and you are paying $400 for comprehensive and collision coverage, maybe it doesn’t make sense to have full coverage. I would suggest looking up your Kelly Blue Book Value (http://www.kbb.com/) to determine the values and have your insurance agent help weigh the pros/cons of coverage.