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:

1. Bodily Injury to Others;
2. Personal Injury Protection (PIP);
3. Bodily Injury Caused by an Uninsured Auto; and
4. 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 Coverage	Required Minimum Limit
Bodily Injury to Others	$20,000 per person; $40,000 per accident
Personal Injury Protection	$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	Required Minimum Limit

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.

Typically, drivers who have their own auto insurance policies can be listed on your policy as "deferred operators” at no additional charge.  However, under Managed Competition, not all insurance companies will allow you to defer a driver who has his or her own insurance policy, and some carriers will charge you extra premium for doing so. 

You can typically “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.