What Do Different Auto Insurance Options Cover and Which Ones Do I Need to Have?

Most states, like Kentucky and Tennessee, require a basic auto insurance policy to protect victim’s right to coverage of medical costs, property damage and other losses.

These mandated minimums are required for every registered driver and failure to carry a policy can mean fines and loss of the right to drive a vehicle in that state.

What is Auto Insurance?

Auto insurance is a legal contract with four parts:

• Policy – A legal contract between an Insurance Company and the policyholder stating what amounts will be paid by each.
• The Limits – The amount of money an insurance company promises to pay out up to a predetermined limit as laid out in the policy.
• The Insurance Company – They offer the insurance and pay the limits.
• The Policyholder – Also known as the vehicle owner. They pay the insurance company regular amounts of money called “premiums” that pay for the insurance.

Policyholders and the insurance company must agree to the terms ahead of time and meet certain minimum requirements mandated by the State. If a policyholder chooses, he can pay higher premiums to receive higher amounts of coverage.

Different Coverage Options

• Liability Insurance – This coverage pays for any injuries, fatalities or property damage the policyholder causes in an accident.
• Personal Injury Protection (PIP) Coverage –Also called “no fault insurance”. This coverage cares for costs associated with injuries of the policyholder and his passenger, regardless of who was “at fault” in the accident and the amount of insurance the other person carries. PIP can “cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.”
• Collision Coverage –Covers damage to the policyholder’s vehicle “after a collision with another vehicle, object or as a result of flipping over.”
• Comprehensive Coverage – This coverage reimburses costs of car damage for something other than another object (such as a fire or natural disaster) and can include theft insurance.
• Uninsured/Underinsured Motorist Protection – This coverage reimburses a policyholder if the other person in an auto accident is carrying insufficient auto insurance, or is driving without any insurance.

Kentucky Auto Insurance Requirements

Registered drivers in Kentucky are required by law to carry a minimum of:

• Bodily Injury Liability Insurance – $25,000, per person
• Total Bodily Injury Liability Insurance – $50,000, per accident for all injuries
• Property Damage Liability – $10,000, per accident

That means, that every Kentucky-based policyholder must have insurance that will pay out those amounts if they are at fault in an accident. Failure to keep that minimum limit is subject to a $500-$1,000 fine, up to 90 days in jail, or both.

Tennessee Auto Insurance Requirements

Registered drivers in Tennessee are required by law to carry:

• Bodily Injury Liability Insurance – $25,000, per person or death per accident
• Total Bodily Injury Liability Insurance – $50,000, per accident for all injuries or deaths
• Property Damage Liability Insurance – $15,000, per accident

Every Tennessee-based policyholder must have these amounts available at a minimum on their policy.

Failure to keep that insurance, or knowingly not providing proof insurance is subject to a $300 fine, a Class A misdemeanor charge, and “punishments up to 11 months, 29 days in jail and/or up to $2,500 in fines.”

Scenario 1 – Hit and Run

Consider a scenario where a driver is struck by another vehicle, and the assailant flees the scene of the accident.

 With just the State Minimums of liability insurance (aka coverage for someone else’s vehicle or property caused by the policyholder) the innocent driver would be left to pay the repairs and medical costs himself.

Applicable optional other insurance options:

• Uninsured/Underinsured Motorist Coverage – Pays for medical care and damage to the policyholder’s vehicle from the Hit-and-Run
• PIP Insurance – Pays for the medical payments, lost wages and the cost of loss services rendered by the injured – especially if in includes death – in the policyholder’s car

Scenario 2 – Hit By Another Vehicle – Policyholder’s Fault

Consider a scenario where a driver collides with another vehicle and both damages the car and causes injuries to its passengers. 

State Minimums will pay for some parts of the damages. However, that may not be enough.

“Chances are that you will need more liability insurance than the state requires because accidents cost more than the minimum limits,” warns the Insurance Information Institute (III).

“If you’re found legally responsible for bills that are more than your insurance covers, you will have to pay the difference out of your own pocket. These costs could wipe you out!”

Because of that, many drivers will choose to pay higher premiums to a higher policy.

“Given the high costs associated with serious accidents, most drivers buy coverage limits beyond the minimum requirements,” III said.

Applicable optional other insurance options:

• Liability Insurance – If a policyholder pays for limits higher than the state minimum, the insurance company will pay out for damages to the other vehicle and any injuries they sustain as a result of the accident.
• Collision Coverage – Pays for the damage to the policyholder’s car when they are at fault in the accident.
• PIP Insurance – Covers medical payments, lost wages and the cost of loss services rendered by the injured – especially if it includes death- of the policyholder and his passengers.

 Scenario 3 – Policyholder’s car gets non-accident related damages

Consider a scenario where a policyholder’s car is damaged by a falling tree, by a pothole in the road, or maybe during a natural disaster like a tornado.

 State minimums would not cover damages to the vehicle.

Applicable optional other insurance options:

• Comprehensive Coverage – Pays for the damages to the vehicle as a non-accident from the storm.
• Collision Coverage – Pays for damages caused by the pothole.
• Property Damage Liability – Pays for damages to anything the policyholder’s vehicle may have struck such as a telephone pole, fences or other structures. The State Minimum may cover this, or require a higher amount.

If you’ve been injured in a wreck, an auto accident attorney can help

Contact our legal team today for a free consultation. Our car accident lawyers are highly experienced in determining what type of insurance you or the at-fault driver had at the time of the crash.