How these different auto insurance coverages can protect you after an auto accident
Auto insurance coverage can go by a lot of acronyms and short-hand descriptions. In Michigan, auto insurance is frequently – and erroneously – separated into two categories, Full Coverage and PLPD. But these shorthand labels do not quite adequately describe the protection for either the victim or the at-fault driver in the event of a car crash.
Below, we are explaining the different types of insurance protection, what they are supposed to do (and actually do) to protect you after a car accident.
Full coverage = Collision and Comprehensive Coverage
Full Coverage means that the auto insurance policy carries Collision and Comprehensive coverages.
Collision Coverage essentially provides protection if your car is damaged in the course of driving. This is very different from a mini-tort, which is limited to the first $1,000 of car damage.
Comprehensive Coverage essentially provides protection if your car is damaged other than in the course of driving, such as theft, vandalism, car fire, etc.
In Michigan, these only apply to the vehicle that is insured with no fault insurance. If you want your car to be repaired or replaced in the event of a big car accident causing a loss, you are responsible for carrying your own Collision and Comprehensive Coverages. These are additional coverages you have to pay for.
The only exception to this is a parked vehicle. Parked vehicles (properly parked) are considered property and the Property Protection Insurance (PPI) of the at-fault driver will pay for all damages, including loss of use, rental car, etc. However, as a backup, your Collision Coverage will also pay in the event the wrongdoer is uninsured.
Types of collision coverage
There are three types of collision coverages, Broad, Standard and Limited:
- Broad Collision: Broad is the most expensive coverage and if you are less than 50% at fault, your insurance company will waive your collision deductible. If you have Broad Collision, you have no Mini-Tort claim.
- Standard Collision: Standard is probably the most common type of collision coverage. You will have to pay your deductible regardless of fault. If your car is totaled, the insurance company will deduct your deductible amount from your agreed payout. You then can pursue the at-fault vehicle for the Mini-Tort claim, which is the lesser of your physical damage amount, your deductible, or $1,000.
- Limited Collision: Limited will cover your collision damage if you are less than 50% at fault and you must pay your deductible. This type of coverage is not recommended
I recently wrote a blog all about PLPD, which stands for Public Liability and Property Damage. PLPD is essentially Full Coverage without Collision and Comprehensive.
You can still be adequately and properly insured even if you don’t have Collision or Comprehensive. It is not economically feasible to continue to pay for Collision Coverage on an old vehicle, unless it is a classic or collector vehicle or otherwise holds its value. If you have an old car (10 years or more) and the car is totaled, you are only going to get the market value of your car. In the meantime, you may have spent more than that on the Collision Coverage. Therefore, in most cases, you are better off banking the savings that you achieve by dropping the Collision and Comprehensive Coverages and using this to pay for a new car.
Unfortunately in these tough economic times, people spend the extra money on other necessities and do not prepare for the potential loss of the car due to an accident. Again, if your car is damaged, the at-fault driver’s Collision Coverage is not responsible for these damages other than the Mini-Tort claim. This is probably the most aggravating single thing for people who don’t understand their insurance coverage, who get hit by someone else, and have a huge amount of vehicle damage – even though the car accident is someone else’s fault, they don’t have to pay for anything beyond the mini-tort.
Insurance policy limits for Full Coverage and PLPD
What neither Full Coverage nor PLPD adequately describe are the policy limits of Liability and Uninsured or Underinsured Motorist Coverages of the policy holders. Someone who has a new car with Collision Coverage can still have a minimum auto insurance policy ($20,000/$40,000) of liability coverage.
If you have a substantial amount of Uninsured AND Underinsured (we recommend a minimum of $250,000/$500,000 – you will be very surprised how inexpensive this important coveage is), it won’t matter if the at-fault driver has Full Coverage or PLPD, because you will have your own insurance coverage to protect you in the event the other driver is uninsured or not adequately insured with regard to liability coverage.
– This blog was written by Jeffrey A. Bussell. Jeff is a No-Fault insurance litigation attorney at Michigan Auto Law. He works closely with car accident victims in the early stages of their lawsuits.