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PLPD Insurance: Eveything you need to know

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PLPD Insurance

Never heard of PLPD insurance? You're not alone despite the fact that most people have most likely been carrying it since they learned to drive.

So, what does PLPD stand for in the insurance world? PLPD stands for personal liability and property damage insurance. You probably know it as liability insurance. Most states require every driver out on the road to carry liability coverage, only the coverage levels vary.

PLPD car insurance pays for the cost of the other drivers' medical costs if you are responsible for an accident and the person you hit is injured. In addition, it covers the cost of any property damage you may do in an accident. While this is usually another person's car it will also cover damage to fences, mailboxes, landscaping, and even garage doors.

It is possible to purchase liability coverage as two separate policies, but it often just sold under the name liability insurance. The term PLPD is mainly used in Michigan due to a unique insurance system they have, but PLPD car insurance is sold across the nation.

What is PLPD Insurance?

The PL in PLPD stands for personal liability insurance and this coverage kicks in when you are at fault in a car accident and there are injuries involved. In most states, it is commonly known as "bodily injury" coverage. This insurance helps cover the medical bills for the other driver as well as any passengers in the vehicle. It also pays out to cover lost wages and rehabilitation costs.

PLPD auto insurance comes with two coverage levels, the first one is the max amount the policy will pay out per person per accident and the second is the maximum payout per accident. Bodily injury coverage limits are usually written together on the policy to spell out the exact coverage limits.

As an example, 100/300 is a common coverage level recommended by insurance experts and this breaks down to $100,000 maximum coverage for each person in the car and $300,000 is the maximum amount the policy will pay out per accident.

This means that if a person in the car you hit ends up with hospital bills that exceed $100,000 you will be on the hook for the remaining amount. The same is true for the total accident coverage, if the medical costs related to the accident go above $300,000 you will be picking up the tab on the balance.

Coverage limits can vary dramatically, and while states set minimum amounts of personal liability coverage that every driver must carry, they are often fairly low and will quickly be eaten up in a serious accident. In California for example, drivers are only required to carry 15/30 bodily injury coverage.

If you are responsible for anything more serious than a fender bender the medical bills could easily surpass these limits very quickly. If there were three people in the car and one of them ended up with $20,000 in hospital bills you would need to cover $5,000 of their bills. The same math applies for the total cost of the accident, if each one of three people in the car rang up $12,000 in hospital bills you would be on writing a check for $6,000.

When it comes to PLPD auto insurance choosing the right coverage levels is key. If you carry the state minimums you will most likely be underinsured if you are in a serious (or even moderately serious) accident. Overall, states have low mandatory limits that are often not enough to cover a collision, ranging from $10,000 in bodily injury liability in Florida to $50,000 in Alaska, Maine and now Michigan. However, most states are around the $25,000 limit.

"I recommend that drivers carry 100/300 when it comes to bodily injury liability and considers upping that to 300/500 if they have significant assets," says Penny Gusner, senior consumer analyst with Insurance.com.

Property damage insurance explained

The other component of PLPD car insurance coverage is the property damage section (the PD of PLPD). This insurance pays for damage to another person's property when you are at fault in an accident. It typically covers the cost to repair the other person's vehicle after an accident, but it also covers issues such as fences, mailboxes, and even damage to a home if you swerve into a house.

The amount of property damage liability coverage you are carrying is the last number in the trio that represents your liability insurance limits. In most cases, liability insurance is written with three numbers that represent your coverage limits, as an example, 100/300/50 breaks down to $100,00 per person bodily injury, $300,000 per accident bodily injury, and $50,000 in property damage.

Property damage is required in almost every state to be legal out on the streets, but the required minimums can be quite low. They range from a mere $5,000 up to $25,000. In many cases, the state minimums are fairly low and you should consider upping your coverage levels.

"I advise drivers to carry at least $50,000 in property damage coverage, but if you can afford $100,000 that is even better." says Gusner. She notes that the extra protection could come in handy if you ever cause a multiple accident or even if you collide with just one vehicle, but an expensive one, like a Tesla.

Vehicles today are stuffed full of sensors and cameras which push up the cost of repairs, this means that even a fender bender can easily exceed $5,000 so carrying the state minimums may result in you having to pony up the difference.

What does PLPD insurance cover?

PLPD insurance covers a wide variety of expenses related to a car accident. Here is a quick overview of just a few of the costs PLPD covers:

Bodily Injury:

This part of PLPD covers expenses related to medical bills and injuries to the people in the other car. It will typically payout for the following costs:

  • Medical expenses: Hospital, ambulance, and other medical costs are covered under this section of the policy. It also covers costs such as wheelchairs, crutches, and other necessary medical equipment.
  • Pain and suffering: If the accident is serious enough you could find yourself on the wrong end of a lawsuit. This coverage will pay for your legal costs as well as any judgments or settlements that come out of a lawsuit up to your coverage levels. Pain and suffering judgments are usually the result of a lawsuit.
  • Lost wages: If the person you injured is unable to work this coverage should kick in to help cover their lost income up to your coverage limits.

Property Damage:

This part of your PLPD insurance covers damage you do to another person's property including the loss of use of that particular property. In most cases, it is another person's vehicle, but it can apply to other property as well. It will typically cover these costs:

  • Vehicle repair: This coverage repairs the damage to the vehicle the other person was driving up to your coverage limits. It doesn't pay to repair your own vehicle, that falls under collision coverage.
  • Repair to the garage door you crashed through: PLPD insurance will pay to repair the damage you do with your car to another person's property. This can include a garage door, a house, a mailbox, or any property you manage to damage with your car. This insurance will also pay for hotel bills and restaurant costs if the damage you caused makes a home unlivable. (Note: It does not pay for damage to your own garage door or other property, only property owned by others.)
  • Removal of the knocked over tree: If you manage to knock over someone's tree or damage their landscaping, you should be covered. Fences are also covered.
  • Lawsuits: If you are sued due to the accident, the cost of the lawsuit and settlements are covered to your policy limits.

How much is plpd insurance in Michigan

Michigan is a unique state when it comes to liability coverage and major changes are coming to their insurance system due to recently passed reform.

Here is an overview of PLPD in Michigan and the changes Michigan residents will be experiencing as new insurance options hit the state.

PLPD insurance is required in Michigan but due to their unique no-fault insurance system, PLPD insurance is typically used when a Michigan resident is involved in an accident out of state while their PIP coverage takes care of in-state accidents.

Michigan passed a no-fault insurance system in 1973 which basically requires drivers to carry personal injury protection insurance (PIP) and use their own insurance after an accident regardless of who is at fault, making PLPD insurance not as crucial in the state.

Until recently, Michigan required that drivers carry unlimited lifetime medical benefits" PIP insurance which meant that insurers had to cover the costs of "reasonable and necessary" medical expenses for people injured in a car accident for their entire lifetime. This pushed up the cost of car insurance dramatically, in fact, Michigan has topped the list of most expensive states for car insurance for the last seven years running according to Insure.com.

Michigan Gov. Gretchen Whitmer signed reform legislation on May 30, 2019, and those changes went into effect for policies issued or renewed after July 1, 2020. Here is an overview of those changes:

Medical Coverage Options:

This is probably the biggest change to car insurance that Michigan residents will see. They can now choose coverage that doesn't include unlimited lifetime medical benefits.

Personal Injury Protection (PIP):

This coverage pays for your medical bills regardless of who caused the accident. Prior to the changes, all drivers were required to carry unlimited lifetime medical benefits" for PIP. The new legislation offers the following new options, all of these coverage levels are per person/per accident:

  • Unlimited Coverage: This is the same coverage as before the reforms
  • Up to $250,000 in coverage: Coverage is capped at $250,000
  • Up to $500,000 in coverage: Coverage is capped at $500,000
  • Up to $250,000 in coverage per person per accident with exclusions: This option allows some or all of the drivers on your policy to be excluded from PIP coverage if they have health insurance in place that meets specific qualifications. A couple of those qualifications are that your health insurance cannot exclude auto injuries and your health insurance deductible cannot exceed $6,000.
  • Up to $50,000 in coverage: In order to qualify for this option, you have to be enrolled in Medicaid and meet other eligibility requirements.
  • No PIP: In order to opt out of PIP entirely you have to have Medicare Parts A & B and meet other eligibility requirements as well.

If you do not make a selection from this list, you will be enrolled in unlimited coverage by default.

Personal Protection Insurance (PPI):

PPI is unique to Michigan. This coverage will pay up to $1 million for damage that your vehicle does to other people's property in Michigan. This coverage requirement continues to stay the same. This coverage is different than your normal liability property damage (PD) because it does not cover damage to vehicles that are driving on the road but only stationary items.  It covers buildings, fences, and properly parked vehicles owned by other people. Besides parked cars, PPI does not cover any other damaged to vehicles.

Residual Bodily Injury and Property Damage (BI/PD):

This is Michigan's version of liability coverage and it kicks in to cover legal defense expenses as well as any judgments related to pain and suffering or excess damages that exceed your PIP benefits. It would also cover medical bills if the accident happened outside of Michigan. Because of Michigan's PIP system, Michigan drivers would use their own car insurance to cover medical bills which is why this insurance mainly deals with legal expenses.

In essence, your Michigan BI/PD coverage only kicks in when:

  • You’re at-fault for an accident in Michigan where someone is seriously injured, permanently disfigured or killed.
  • You’re at-fault in an accident with a non-resident of Michigan who is in a vehicle not registered in Michigan.
  • You’re at-fault in an accident that takes place outside of Michigan.
  • You’re 50% or more at-fault in an accident that causes damages to another person’s car (PD will pay up to $3,000).

The new law puts minimum coverage levels at 50/100/10 meaning:

  • $50,000 per person who is injured or killed in an auto accident
  • $100,000 for each accident for all people injured or killed
  • $10,000 for damage your car does to property in another state

The minimum requirements until July 2020 were set at 20/40/10.

Other changes going into effect

While there are numerous other changes going into effect here are a couple of the bigger ones that don't relate to liability insurance:

  • Non-Driving Factors: Michigan will no longer allow insurance companies to consider the following factors when setting a premium: credit score, educational level, homeownership, occupation, marital status, sex, and ZIP code.
  • Michigan Catastrophic Claims Association (MCAA): The MCAA is a private non-profit unincorporated association. Insurance companies that in Michigan pay the first $580,000 in PIP benefits and the MCAA reimburses insurers for claims above that amount. The MCAA will now be required to provide an annual report to Michigan Legislature, publish an annual consumer statement on its website, and will be subject to an audit by the Michigan Department of Insurance and Financial Services (DIFS) every three years. There was an annual MCAA assessment fee car owners were charged. Due to the reforms, only drivers who choose to continue the unlimited PIP option will be requied to pay the fee. The good news for those drivers is that the fee has dropped from $220 per vehicle to $100, a 55% reduction.

The goal of these changes is to lower car insurance rates in the Wolverine State, we will have to wait and see how successful they end up being.

How much PLPD do you have to carry?

Almost every state requires drivers to carry a minimum amount of PLPD auto insurance. The requirements vary by state, the Insurance Information Institute (III) put together this list which spells out the requirements of every state.

The differences can be dramatic, as an example, Pennsylvania requires drivers to only carry $15,000 in bodily injury coverage while Alaska has a minimum level of $50,000.

Despite the variance, most state-required minimums are very low and can leave you unprotected, particularly if you are in a serious accident.

How to get PLPD insurance

Since PLPD insurance is require in almost every state, it is one of the most common types of car insurance available. You can purchase a PLPD policy from almost all insurance agents. Here are a few tips to help keep your premiums affordable and ensure you have enough coverage:

  • Shop around: This is always solid advice. Insurers rate risk differently which can result in a dramatic difference between premium quotes. Get at least five quotes and always make sure you are comparing apples to apples in regard to coverage levels and deductibles.
  • Discounts: Insurance companies offer tons of discounts so make sure you are getting all available discounts on your policy. Purchasing your home and auto insurance from the same insurer should result in a significant bundling discount.
  • Improve your credit score: Insurers use your credit score (not in Michigan now, however there they can use credit history) to determine your premium and a low score can result in a significantly higher premium. Improving your score, and having a good history of paying on time, can help lower your premium.