Tying a Pillow to the Bumper: Liability, Uninsured Motorist, and Medical Payments Coverage

Like legal jargon, medical terminology, and Bob Dylan’s recent lyrics, the language of automobile insurance can be hard to understand. To make it harder, the person trying to explain the different insurance types to you is usually the person trying to sell you the insurance, making it difficult to know what you can trust. This page addresses the three types of automobile insurance coverage you’re most likely to hear about—liability, uninsured motorist, and medical payments coverages—and explains the differences. (The terms in this article may apply to other states, but the article was written with Georgia in mind).

Liability coverage is the type of insurance that the state requires you to buy. If you’re in a wreck, and you’re at fault, your liability coverage will be available to anyone injured by your mistake. In other words, liability insurance is for the other guy. The minimum amount of liability insurance varies from state to state, but in Georgia, the minimum is $25,000—meaning that every driver on the road is required by law to have at least $25,000 in liability coverage, with the option of buying more. So theoretically, if you’re in a wreck that another driver caused, there should be at least $25,000 available to you. There can be problems, however—sometimes the other driver hasn’t purchased the insurance that the state requires, and even if he has, $25,000 may not go very far with the high cost of modern medicine. Unless the at-fault driver is independently wealthy, therefore, you could be facing a shortage of funds when you need them most.

That’s where uninsured motorist (“UM”) coverage comes in.If someone crashes into you, and that person either has no insurance or doesn’t have enough insurance to pay for your damages, your UM coverage can cover the difference. In short, UM insurance is for you. For example, pretend that someone wrongfully rear-ends you at a red light and causes $100,000 in damages. Pretend the at-fault driver has only $25,000 in liability coverage available to you, leaving you $75,000 short. In Georgia, if you have purchased UM coverage, your UM coverage can fill the gap. For instance, if you had purchased $75,000 in added-on UM coverage, you could recover the full $100,000. If you had purchased only $50,000 in added-on UM coverage, you could recover a total of $75,000. So, if you’re looking out for yourself, buying UM coverage is a good idea. (Usually, you can only buy as much UM coverage as you have in liability coverage—for example, if you want $100,000 in UM coverage, you have to also buy $100,000 in liability coverage.)

Medical payments (“med pay”) coverage is another way for you to look out for yourself and your loved ones. While liability or UM coverage can apply to any type of damages—for instance, medical bills or lost wages—med pay coverage applies only to medical bills. It often provides a way for you to get your medical bills paid fast. If you’re in a wreck and you need money for medical expenses quickly, the other driver’s liability insurance may not be much help if the other driver’s insurer moves slowly—which happens a lot. UM coverage may not cut the mustard either because insurers sometimes refuse to pay out UM benefits until the liability insurer has paid its share. In that situation—when liability and UM insurance money is slow in coming—med pay coverage could give you the money that you need at the time when you need it.

Injury-causing wrecks are no fun, but insurance can help soften the blow. It’s like tying a big pillow to the bumper. If you’re in a wreck, you’ll be thankful for the padding.