Auto Insurance Basics
In Pennsylvania, the Motor Vehicle Financial Responsibility Law governs the basic principles of automobile insurance. While the law requires that you maintain certain minimum insurance, your policy may afford your more than that minimum.
Your "liability" coverage is insurance you purchase to pay for injuries you may cause other people by your own negligent driving. Someone you may accidentally injure, or whose car or property you might accidentally damage, can sue you. If successful, he or she would be entitled to receive money from you, which you would obtain from your liability coverage. This coverage may be referred to on your policy or insurance statement as "third party coverage." You and the insurance company are the first and second parties; those who may sue you are often referred to as "third parties."
Your liability coverage probably includes a promise from the insurance company to pay for the services of a lawyer of the company's choice to defend you if your are sued. It also includes a specific limit on the amount of money the insurance company must pay if such a lawsuit is decided against you or settled by the insurance company. Once the insurance company has paid up to its liability limit, you are on you own to pay the balance, if any, owed to the person who sued. You should know the liability limits of your policy and be sure that the coverage you purchased is appropriate.
Your policy also provides certain coverage for your own injuries. See a separate discussion of Medical Expense Insurance Coverage. Uninsured and Underinsured Motorist Coverage is something you purchase from your own insurance company in case you are injured by someone whose liability coverage is insufficient or by someone that has no insurance. Lastly, your insurance policy gives you the option of choosing "Limited Tort vs. Full Tort Coverage" that is explained separately.