In Tennessee—if you own an automobile—you must have auto insurance. That is true for a very simple reason: It’s the law. And has been since 1977. Failure to have adequate insurance coverage on your vehicle will result in a fine, and possibly the towing of your vehicle.
And make no mistake: The state of Tennessee is very serious about this issue. In fact, in June 2015 Governor Bill Haslam signed the James Lee Atwood, Jr., Law, an aggressive package of new penalties against uninsured drivers. Among other things, the law significantly boosted fines for non-compliance with the law. And repeat offenses could lead to the loss of your driver’s license—or even a jail sentence.
So you may be wondering: Is this the state government being out-of-line, or acting like Big Brother? In our opinion, no way. There are 6 extremely sound reasons why auto insurance should be mandated, all of which have to do with protecting you, protecting your wallet, and protecting others.
Those 6 reasons are the 6 types of protection provided by a standard auto-insurance policy. They include Bodily Injury Liability . . . Medical Payments or Personal Injury Protection (PIP) . . . Property Damage Liability . . . Collision . . . Comprehensive . . . and Uninsured and Underinsured Motorist. Let’s look at each of these individually, focusing on how each protects you (the policy holder), if an accident or some other mishap occurs.
Bodily Injury Liability
This coverage protects you and your wallet if you cause injuries to another person or persons. Typically, you and all family members listed on your policy are also covered when you drive someone else’s car, as long as you have their permission to do so.
Some people may think, “I’m a really good driver. I’ve never been involved in a bad accident. So, therefore, I’m only going to buy the state-required minimum of liability insurance.” But it’s important to think that through. The fact is, anyone—even the best driver on the planet—can suddenly be involved in a serious accident. And if you are, you may be sued for a huge sum of money. Buying more than the state-required minimum of liability insurance can go a long way toward protecting your crucial assets, such as your bank account and home.
Medical Payments or Personal Injury Protection (PIP)
According to the National Safety Council, more than 4.4 million Americans were injured in auto accidents in 2015, the largest one-year percentage increase in more than 50 years. Worse still, more than 2.3 million of those accident victims sustained “serious injuries,” requiring significant medical attention, according to a report in Newsweek.
God forbid you or any of your family members are involved in such an accident. But if you are, your Medical Payments or Personal Injury Protection (PIP) coverage will pay for the treatment of injuries to you (the driver) and passengers of the policyholder’s car. Some forms of PIP even cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in the auto accident. It also may cover funeral costs. (If you are interested in any of those forms of coverage, please ask your agent for details.)
Property Damage Liability
Unfortunately, in the real world your car has the potential to do serious damage to many types of property. That includes—but is not limited to—someone else’s car, fences, telephone poles, lamp posts, buildings, and other structures. If anything like that should ever happen to you, Property Damage Liability will help pay for the damage you (or someone driving your car with your permission) may cause.
If your car sustains damage as a result of collision with another car, collision with an object, potholes (usually), or flipping over, this coverage will help mitigate your financial losses. Generally speaking, collision coverage is sold with a deductible of anywhere from $250 to $1,000—the higher your deductible, the lower your premium.
Many people have asked us over the years, “What if the accident is my fault? Will collision coverage still pay?” Typically, the answer is “yes.” Your collision coverage will reimburse you for the costs of repairing your car, minus your deductible. If, on the other hand, the accident is not your fault, your insurance provider may try to recover the amount they paid you from the other driver’s insurance provider. If they succeed, you’ll typically be reimbursed for that amount plus the deductible.
What if your car suffers a loss due to theft? Or what if damage to your car is caused by something such as falling objects, fire, heavy winds, hail, vandalism, or deer? Or what if your windshield is cracked or shattered? That’s where your comprehensive coverage steps in to help you.
As a general rule, comprehensive insurance is sold with a deductible of $100 to $300. But you may opt for a higher deductible if you want to lower your premium.
Uninsured and Underinsured Motorist Coverage
We began this blog post by talking about the stiff fines and penalties you’ll receive in Tennessee for driving without auto insurance. You’d think everyone would “get it,” but sadly that’s not true. That’s why this coverage is so important. It will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured driver, or by a hit-and-run driver.
And this coverage also will help you if a driver is underinsured—that is, when he or she is at fault in an accident, but has insufficient insurance to pay for your total loss.
If you’re like the average Tennessean, your car is one of your most valuable assets . . . and the second-most-expensive purchase you’ll make in your lifetime, after your home. We hope we’ve revealed exactly how auto insurance protects that valuable asset, 24/7. If you have any questions or need clear guidance regarding auto insurance, we’re always here to help you—A 2 Z!