Liability Insurance
Liability insurance is to protect and indemnify a driver who negligently injures another person. Washington law requires all drivers to carry a minimum of $25,000per person, and $50,000 per accident as the minimum liability insurance. Click link below for information on mandatory insurance, at the Washington Insurance Commissioner website.
http://www.insurance.wa.gov/consumers/auto/mandatory_auto.shtml#1-
If you injure someone, or damage their car while operating your vehicle, your insurance company will hire a lawyer to dispute the case, and in theory, protect you. While the law requires $25,000 in liability insurance, this amount may be insufficient to protect you in the event you injure someone in an accident. It is important to have enough liability insurance to protect your assets. If the damages to another person exceeds your liability limits, you can be held personally liable for those damages.
PIP Coverage (Personal Injury Protection)
PIP pays for medical expenses from a car accident, regardless of who is at fault. Insurance companies are required to offer PIP insurance, but it is not legally required by the owner of the car. PIP insurance can be from $10,000 to $100,000.
While not legally required, it is important to have PIP coverage to protect yourself. For example, if you are injured by an uninsured driver, and have no PIP, you will find yourself in deep trouble and you may have to pay the bills out of your own pocket. If you have medical insurance your company should pay for some of your medical treatment, but it depends upon the policy. Many health insurance policies have co-pays, and big deductibles. PIP will pay for all medical expenses, up to the limit, related to the accident, in theory. I state in theory because some car insurance companies take a long time to pay, or refuse to pay based upon their own "doctors" who allege the treatment isn't necessary or reasonable.
UIM Coverage (Underinsured Motorist)
Underinsured Motorist Coverage is insurance provided by your company, to protect you from an uninsured, or underinsured motorist who injures you or a family member. State law requires that your insurance company offer you the coverage, but you may decline if you sign a written waiver. It is important to have UIM coverage. Without UIM you may find yourself with absolutely no recourse if you are injured by an uninsured, or underinsured driver.
An uninsured driver has no insurance at all. An underinsured driver has insurance, but the liability limits are too low to compensate you for your injuries.
For example:
Mr. Smith runs a red light and injures Mr. Jones. Mr. Jones has $50,000 in medical bills, but Mr. Smith has only $25,000 in liability insurance. That means that Mr. Jones has to pay the other $25,000 in medical bills from his own pocket, unless he has UIM coverage. With UIM coverage, your own insurance company will, in theory, pay the difference between what your case is worth, and the liability insurance of the at-fault driver.
Subrogation
Subrogation is a legal doctrine which allows your insurance company to get their money back, from you, after you recover damages from the negligent person who injured you in a car accident. Subrogation is legal, and enforceable, yet most people don't know about it until they are hurt.
Subrogation usually involves PIP payments made by your car insurance company, but can also involve your medical insurance, when you are injured in a car accident, or even a slip and fall case against a property owner.
Many people think its unfair that they pay for car insurance, and after their insurance company pays the medical bills, they have to return the money if they get a settlement from the negligent driver. It may seem unfair, but it is written into your insurance policy, whether you know it or not, and it is legal.
Washington Insurance Commissioner
The Insurance Commissioner is an elected official who regulates the insurance industry. The commissioner's website is a valuable resource full of very practical information that can answer many of your questions.
Click on this link to go directly to the page for automobile insurance. http://www.insurance.wa.gov/consumers/auto/AutoCovTypes.shtml
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