Understanding Auto Insurance
An auto insurance policy is a contract between you and an insurance company. You agree to pay the cost of the insurance policy, called a premium, and to obey the insurance company’s stated rules. In return, the insurance company agrees to pay for certain expenses associated with an accident or other covered losses.
Coverages
An auto insurance policy is made up of different types of insurance coverages. While there are many types of coverages available, you are only required to have four:
- Bodily Injury to Others;
- Personal Injury Protection (PIP);
- Bodily Injury Caused by an Uninsured Auto; and
- Damage to Someone Else’s Property.
Optional insurance coverages such as Comprehensive and Collision are commonly purchased by consumers.
Each type of insurance coverage has a limit, meaning that the insurance company will not pay more than this amount for a claim. You are required to purchase certain minimum limits for each of the required coverages. Given the high costs associated with serious accidents, most drivers buy coverage limits beyond the minimum requirements.
Required Coverage | Required Minimum Limit |
|---|---|
| Bodily Injury to Others | $20,000 per person; $40,000 per accident |
| Personal Injury Protection (PIP) | $8,000 per person, per accident |
| Bodily Injury Caused by an Uninsured Auto | $20,000 per person; $40,000 per accident |
| Damage to Someone Else's Property | $5,000 per accident |
Required Coverage
In order to register and drive your vehicle in Massachusetts, you are required to at least purchase the auto coverages and limits shown in the table above. Your auto insurance policy must list all licensed drivers living in your household who are related to you by blood, marriage, or adoption, including drivers already covered by their own insurance policies. You should also list any person who occasionally drives your car. While the policy only requires you to list “customary” operators, insurers often interpret this term broadly, and some require that you list anyone who may use your vehicle.
Drivers who have their own policy, should be listed on your policy as “deferred operators.” Their addition will not affect your premium. You may exclude any household member who does not drive your car, but in order to do so, you must submit an “exclusion form” to your insurance company. Drivers who only have a Learner’s Permit are not required to be listed on your policy until they are fully licensed.
If you fail to list any “customary” operator or licensed household member, your insurance company might refuse to pay your claim, even if you were driving at the time of the accident.