Automobile insurance policies in Alabama are designed to provide coverage to persons that are injured in motor vehicle wrecks or when a vehicle is damaged. Every policy may contain one or more of several different types of coverage. These coverages most often include liability coverage, medical payments coverage, collision coverage, and underinsured/uninsured motorist coverage. Policies may also include provisions for rental insurance or loss of use.
Liability coverage is the type of coverage that is most familiar to most drivers. Your liability coverage provides protection for you if you are the driver of a vehicle that is responsible for or “at fault” for a collision. This coverage will pay for the damage caused to other vehicles and will provide compensation for bodily injury caused to other people by the wreck. Keep in mind, however, that the amount your insurance company will pay for damages is not unlimited. Alabama has a mandatory liability insurance law that requires a minimum coverage of $25,000 per person and $50,000 per incident for bodily injury and $25,000 per incident for damage to property. A $25,000 per person policy limit means that the most anyone injured person can collect under the policy is $25,000. If there are only two injured persons, they can each make a claim for up to $25,000. However, if there are more than two persons injured, the most the carrier will pay for all claims is $50,000.
Unfortunately, the minimum coverage may not be sufficient to pay for all the harm suffered in a particular wreck. Insurance carriers typically offer policies with per person bodily injury limits of $25,000, $50,000, $100,000, $250,000 and higher. It is important to consider the value of your personal assets when deciding what limit of liability coverage is necessary to protect you and your family. An injured person does not have to accept the policy limits to settle a claim. In the event that the value of an injured person’s claim exceeds the liability policy limits, that person could decide to seek a judgment against your personal assets, including your wages, home, real estate, investment or retirement accounts, and other possessions.
Your medical payments coverage will pay for medical treatment that is necessary to treat the occupants of your vehicle for any injuries suffered through the use of the vehicle. This coverage is available to all occupants of the vehicle regardless of who was at fault for a wreck—or even if it is a single vehicle crash. The payments under this coverage can be paid to the injured person or directly to the healthcare provider. Unfortunately, this coverage is often limited to $1,000, $2,000 or $5,000. However, coverages with limits up to $100,000 are offered by many carriers. It is important to note that medical payments coverage can only be used to pay for medical bills—it does not provide compensation for lost income, pain and suffering, or mental anguish.
Your collision coverage will pay for property damage to your vehicle regardless of who is at fault in a wreck. In most policies, you must pay a deductible before the collision coverage is applicable. This deductible is often $250 or $500, but may be greater, depending on the policy provisions. Collison coverage will pay for the reasonable cost of repair to a vehicle or the fair market value of the vehicle in the event of a total loss. Collison coverage usually does not cover for loss of value of the property or diminution in value as a result of damage.
Your underinsured/uninsured motorist coverage may be the most important type of coverage to consider when purchasing automobile insurance. This coverage will pay for the bodily injury to occupants of your vehicle when another driver is at fault but does not have liability insurance, or if the limits of the responsible driver’s liability coverage is not sufficient to pay the full and fair value of the claim. This type of coverage will apply to all occupants of your vehicle and can even be available to you if are injured while riding in someone else’s vehicle.
If you have questions about your automobile insurance coverage or questions about making a claim following an automobile wreck, Siniard, Timberlake & League, P.C., has lawyers who are experienced and understand insurance policies and claims. Contact us for a free consultation to discuss your situation.