When you're in an auto accident, the insurance maze can be pretty confusing. The purpose of this article is to explain 4 different types of auto insurance coverage.

PERSONAL INJURY PROTECTION
MEDICAL BILLS AND LOST WAGES - Delaware law requires every automobile licensed in the State to carry no-fault insurance. This is called "personal injury protection" or "PIP." Regardless of whose fault the accident is, your insurance company will pay the medical bills and lost wages for you and your passengers. The minimum amount of coverage is $15,000 per person, and $30,000 per accident. This means if 1 person is injured, the minimum coverage provides up to $15,000 in PIP benefits. If, however, 2 or more people are injured, and there's only minimum coverage, the total amount available for these individuals is $30,000.

PIP also pays for "substitute services" and up to $5,000 in funeral expenses.

BODILY INJURY PROTECTION
When you're in an accident, the driver who's at fault should report the accident to his insurance company. If the at-fault driver is sued, the bodily injury protection coverage of his policy comes into play. His insurance company (the "liability carrier") must defend him in the lawsuit by hiring an attorney to represent him. The minimum amount of this kind of coverage allowed by Delaware law is $15,000/$30,000. If the at-fault driver only has the minimum coverage and he injures 1 person, the most the injured person can receive from the liability carrier is $15,000. If 3 people are injured in the same accident, the most any 1 person can receive is still $15,000, but the most all 3 can receive is $30,000. If the case does not settle, and the jury awards the injured person more than $15,000, the liability carrier would pay $15,000, and the at-fault driver would be personally responsible for paying the difference between the jury award and the $15,000 paid by his insurance company.

To protect himself from be personally responsible for the amount awarded by the jury (minus the amount paid by his insurance company), the at-fault driver could have purchased greater bodily injury protection. For example, if he had $100,000/$300,000 of coverage, and the jury awarded more than $15,000 but less than $100,000, the at-fault driver would be personally responsible for nothing.

UNDER-INSURED MOTORIST COVERAGE
If you take the first example under bodily injury protection, we have an at-fault driver with only minimal coverage. If the jury awards the injured person more than $15,000, the most the at-fault driver's insurance company is required to pay the injured person is $15,000. Although the at-fault driver is personally liable for the excess, it's been my experience over many years that most injured people don't try to collect the difference from the at-fault driver. The first reason is that most people don't want to go after the other driver's house or other assets because he didn't intentionally cause the accident. The second reason is the fact that the at-fault driver probably doesn't have a great deal of money laying around or assets, because if he did, he'd want to protect his assets by taking out more than the minimum insurance.

So, we have a situation where the jury finds that the fair value of your claim for personal injuries is greater than the amount of coverage the at-fault driver has. What happens after you receive the policy limits from the liability carrier? The next step is for you to file a claim against your own insurance company under your under-insured motorist coverage. This coverage ("UIM") protects you in case you're injured by someone who has insurance, but the amount of coverage is not enough to pay the fair value of your claim. If the at-fault driver has $15,000, and a jury awards you $100,000, you can get the difference from your insurance company if you purchased sufficient under-insured motorist coverage.

To protect yourself and your family in case you are severely injured by a driver with minimum coverage, you should sign up for the highest amount of under-insurance coverage you can afford.
In this regard, your insurance company is required by law to offer you the same amount of under-insured coverage as your liability coverage.

UNINSURED MOTORIST COVERAGE
When an accident victim is injured by a negligent driver who has no insurance, or by a hit & run driver whose identity and insurance coverage are unknown, the injured person files a claim for his injuries with his own insurance company under the uninsured motorist coverage of his insurance policy. And if you're injured under these circumstances, hopefully your insurance agent explained to you the consequences of being injured by an uninsured driver, and you purchased substantial uninsured motorist coverage. Your insurance company is required by law to offer you the same amount of uninsured coverage as your liability coverage