This guide, taken from the Division of Insurance, Consumer Service Department of the Commonwealth of Massachusetts, explains the specialized terminology you’ll find in each part of your Massachusetts Auto Insurance policy. Use it now as a quick reference on the types of coverage you can buy.
Note: Policy forms for non-Massachusetts Auto Insurance Policies are different.
This pays for injuries (such as medical expenses, pain and suffering) to people injured or killed by your automobile in an accident that occurs ONLY in Massachusetts, up to $20,000 per person and $40,000 per accident. Injuries to the driver or passengers in your car aren’t covered.
If you drive outside of Massachusetts or if you ever drive with guests in your car (everyone), you need Optional Bodily Injury to Others (Part 5), for coverage in such situations.
You can be sued for much more than this basic ($20,000/ $40,000) coverage. Buying higher limits under Part 5 may protect you from serious losses. The limits you select will depend on your personal financial situation; limits of $250,000/$500,000 are often selected.
This coverage pays up to $8,000 to you or anyone in your car, anyone living in your house, passengers and pedestrians, no matter who is at fault. PIP pays for medical expenses, replacement services and lost wages.
Your PIP coverage pays for medical expenses in excess of $2,000 that are not paid for by your medical insurance. However, PIP coverage will not pay for medical expenses over $2,000 that your health insurer would have paid if you had received treatment in accordance with the terms of your medical plan.
Your health insurance may not cover all of your medical expenses from an auto accident, co-payments and large deductibles. Also, your disability insurance (LTD) policy, if you have one, may have long waiting periods. The small savings from the larger deductible is generally not worth it.
Motorcycle drivers and riders are not covered by PIP.
Note: PIP follow you – that is, PIP covers owners of cars and motorcycles, and members of their households, if they are injured while occupying or struck by a car that does not have Massachusetts compulsory insurance.
This coverage protects you, guest drivers of your car, household members and passengers (unless covered by another Mass, auto policy with similar coverage) against injuries caused by an uninsured (including hit-and-run) driver. A basic minimum limit of $20,000 per person and $40,000 per accident is mandatory. There is no coverage here for damage to your auto.
This part pays for damage to someone else’s property (car or other property) when you, a household member or another permissive driver cause an accident. A minimum limit of $5,000 is required.
With the rising costs of automobile repair, it makes sense to purchase more than the required minimum limit. This can be done at very minimal cost. Limits of $100,000 are usually purchased.
OPTIONAL INSURANCE – (Parts 5-12)
This optional coverage extends your liability protection (the basic $20,000/$40,000 limits under Bodily Injury to Others) up to the amount you purchase. This option extends your coverage beyond Massachusetts to anywhere in the USA, its territories, possessions, or Canada. This coverage also pays for damages suffered by guests in your auto.
Your automobile is not covered in any country other than the U.S. and Canada. For example, there is no coverage in Mexico.
You could be sued and may be liable for much more than the $20,000/$40,000 limits provided by required under Bodily Injury to Others (Part 1).
Buying higher limits under Optional Bodily Injury to Others (Part 5) makes good sense if you have assets you wish to protect. Limits of $250,000/$500,000 are often purchased. This can then be augmented by an Umbrella Policy.
This part covers medical expenses for you, your household members and passengers, over and above amounts covered by PIP (Part 2), no matter who is at fault in the accident. The minimum amount you can buy is $5,000. If you purchase this coverage, higher limits should be considered.
Collision coverage pays for collision damage to your car (including many rented or borrowed cars too), less your deductible, no matter who causes the accident. If applicable, your bank or leasing company will require this coverage.
Selecting Your Deductible:
The standard deductible is $500 unless you select a different amount. You can always save on your premium by choosing a larger ($1,000 or more) deductible. In determining the amount of deductible that is right for you, decide how much you can afford to pay out of your own pocket in the event of an accident in which you are at fault, or if hit by a hit-and-run driver. This information regarding selecting a deductible also applies to Limited Collision (Part 8) coverage and Comprehensive Coverage (Part 9).
Waiver of Deductible:
Buying Collision coverage with a waiver of deductible means that your deductible will not apply when an accident is caused by another identifiable driver. This is very helpful to avoid having to make a claim against the other, at-fault driver’s policy – often a time-wasting exercise. Also, if you are hit by another identifiable driver who is uninsured, the waiver of deductible will pay your collision deductible.
Find out what your car is worth today. If you have a car of lower dollar value, it may be a wise choice not to buy the Collision and Comprehensive Coverage.
However, if your automobile has substantial value because of its exceptional condition, such as an antique, classic or restored automobile, you should have it appraised and then consider insurance coverage in light of the appraised value. Special endorsements may be available in such situations.
This part also pays for collision damage to your car. You must not be more than 50% at-fault, and the owner of the other car must be identified. This coverage is rarely purchased.
Comprehensive coverage pays for damage to, or loss of your car, less your deductible, resulting from non-collision claims such as fire, theft, vandalism and hitting an animal. This coverage allows up to $15 a day (to a limit of $450) for substitute transportation (car rental, taxi, bus and train fare) until your stolen auto is recovered. Your personal property is not covered unless it is permanently installed.
If your automobile is stolen, you must report it to the police and your insurance company. You will be covered for transportation costs after the first 48 hours following the filing of the report.
This coverage may be denied or priced higher under certain conditions.
This coverage reimburses up to $15 a day (up to $450 in total) for necessary car rental or transportation costs (including taxi, bus and train fare), while your car is undergoing covered repairs. Consider coverage limits of up to $100 a day (up to a maximum of $3,000) to rent other than a very basic car.
Drive-other-car coverage: Your collision, limited collision and Comprehensive coverage will apply to any other car you rent or use with the permission of the owner, EXCEPT a vehicle owned or regularly used by your spouse or a household member.
If you have access to another car, can afford to take a cab or rent a car when your car is in the shop for covered repairs, you may not need Substitute Transportation coverage.
Towing and labor coverage pays up to $25 for towing and labor charges each time your car breaks down, whether or not there is an accident. You are covered only for the on-site labor costs at the breakdown site needed to get your car going again. Coverage of up to $50 is available.
If you belong to a motor club, you probably do not need this coverage since many motor clubs’ services include towing and labor.
This coverage protects you, guest drivers of your car, household members and passengers, unless they have a policy of their own, or are covered by a similar policy of another household member. The accident must be caused by someone without enough bodily injury coverage. The fine print: It pays you up to the difference between the total amount collected from the bodily injury liability insurance covering the owner and driver of the other car, and the limits you purchased for this coverage.
Since many people buy only minimum required amounts for bodily injury to others, buying higher limits may protect you from incurring high, out-of-pocket, personal injury expenses. You may purchase coverage up to, but no more than, the limits of the bodily injury to others coverage you carry.
Many people buy the same limits for Parts 3, 5 and 12.
The Massachusetts personal auto policy states that you will collect the “actual cash value” (ACV) of your car. Unfortunately, the policy does not contain a definition of “actual cash value”. Fortunately, in an attempt to be both fair, and to protect consumers, Massachusetts has regulations that help determine this value. The Commissioner of Insurance’s regulation entitled “Standards for The Repair of Damaged Motor Vehicles,” 211 CMR 133.00. Section 133.05(1) of this regulation requires that:
First, when is a car a “total loss”? “Whenever the appraised cost of repair plus the probable salvage value may be reasonably expected to exceed the actual cash value of the vehicle, the insurer shall determine the vehicle’s actual cash value.””
The commissioner’s regulation specifies actual cash value requires consideration of four factors:
So, it’s not just what the “blue book” indicates. And, it’s not necessarily what the local dealer says it is. Nor, can you go online and find 1 car that might be very similar to your car. You need to take into account the four factors and work with your adjuster and agent to come up with a reasonable settlement.