Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 21, 2020

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Here's what you need to know...

  •  Liability coverage is meant to protect the people in other cars should you cause an accident
  • Comprehensive insurance policies include coverage for passengers like friends and family members
  • Insurance plans are written with specific limits that dictate what amounts will be paid

As a driver, there may be times when you transport other people in your car. You have coverage for other vehicles and drivers in the event that you cause an accident, but do you know how your own passengers will be covered?

The fact is that passengers in other cars are covered under the liability section of your insurance, so you need to review your levels to ensure that you have the coverage you need.

However, the passengers in your own car may not be covered at all.

Start comparing car insurance rates now by using our FREE tool above! Enter your zip code to get started!

Table of Contents

Liability Coverage and Medical Coverage

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Remember that liability coverage is meant to protect the people in other cars should you cause an accident. It does not extend to your own injuries or those sustained by a passenger in your vehicle.

If you want to be sure that your own passengers are covered, you need to invest in medical coverage.

This additional insurance will provide your own passengers with the coverage they need for medical costs resulting from an accident. It covers expenses like:

  • Medical expenses
  • Damaged eyeglasses
  • Rehabilitation
  • Other expenses associated with the accident

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Vehicles for Hire

Comprehensive insurance policies include coverage for passengers like friends and family members, but the rules will change when the car is being used for livery services.

If you’re running a business on the side by participating in ride-sharing services, then the passengers you’re driving to work in the morning may not be covered.

While the apps that allow you to provide rides to other people in need can help you make a little extra money, they’re also opening you up for a greater liability if you don’t have the right coverage.

Here are some of the problems associated with transporting other people in exchange for a fee:

  • Livery services are specifically prohibited with most policies.
  • Insurance companies may determine that your vehicle was for hire on the way to pick up the rider or as soon as the app is turned on to look for riders.
  • Passengers can sue the drivers for lost wages and pain and suffering in addition to simple medical expenses.

The bottom line is that you should make the investment in the right insurance protection if you’re going to participate in any type of ride-sharing program.

This is particularly important if you’re going to be transporting strangers in your vehicle.

The Coverage Limits

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Insurance plans are written with specific limits that dictate what amounts will be paid in the event of an accident. While passengers in the other car will have their medical expenses covered, the insurance plan will only pay up to the stated limit.

This is typically stated on the policy as an individual or per incident.

If you’re covered for $5,000/ per individual and $15,000/ per incident, then your policy will only pay out a total of $15,000 in medical payments for the driver and all passengers in the car.

If the other vehicles had a total of four passengers and they each sustain serious injuries, then it’s possible that each person will receive less than the $5,000 normally available for individuals.

In the end, you’ll be responsible for the difference.

It’s also important to know what liability insurance does and does not cover. While medical bills come immediately to mind, it actually goes well beyond the medical expenses to include:

  • Lost wages
  • Pain and suffering
  • Trial costs
  • Associated legal fees

When you consider everything this liability insurance can be used to cover, it becomes clear that most state minimums are not enough to adequately protect you.

You may want to speak with a financial advisor to determine what level of protection is more appropriate.

Remember that the liability portion of your insurance plan will only cover injuries you cause to drivers and passengers in other cars.

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Protection for Businesses

Businesses are often worried about the potential liability associated with an authorized passenger riding in a company car.

Standalone passenger accident insurance is now available for all types of commercial vehicles. It provides additional coverage to approved passengers.

It’s an easy and affordable way for businesses to limit their losses in the event that an authorized driver is involved in an accident.

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Uninsured and Underinsured Motorists

Your liability coverage protects the passengers in other cars if you cause an accident. You have medical coverage to protect your own passengers in this same instance.

However, what happens when someone else causes the accident? In a perfect world, they would have the required liability limits to protect you and your passengers, but many people drive without insurance or adequate levels.

If you’re struck by an uninsured or underinsured motorist, you may not have any coverage.

When comparing insurance premiums, be sure to look at the coverage for underinsured and uninsured drivers and invest in the appropriate level of coverage.

You’re trying to save on insurance premiums, but you need to be careful about cutting your protections. If your passengers don’t have the coverage they need, then you could wind up facing a personal lawsuit.

Protect your assets and give yourself peace of mind by increasing your liability limits, adding medical coverage, and reading the fine print about uninsured and underinsured motorists.

Start comparing car insurance rates now by entering your zip code in our FREE tool below!

References:

  1. http://www.kiplinger.com/article/insurance/T004-C000-S001-medical-payments-coverage-you-may-not-need.html
  2. http://www.naic.org/cipr_topics/topic_commercial_ride_sharing.htm
  3. http://www.carsdirect.com/car-insurance/what-does-bodily-injury-liability-cover
  4. http://www.insurancejournal.com/news/national/2014/03/28/324725.htm#
  5. https://www.nationwide.com/commercial-auto-insurance.jsp
  6. https://www.statefarm.com/insurance/auto/coverage-options/medical-payments-coverage
  7. https://www.allstate.com/tools-and-resources/car-insurance/ask-agent-premium-deductible-limit.aspx
  8. https://www.progressive.com/glossary/uninsured-underinsured-motorist/