There are many different types of insurance claims: automobile, homeowners, general liability, professional, umbrella etc. What they have in common is a contract between the insurance company and the insured. Rule 1 is read the contract.
In regard to automobile insurance the foundation is liability coverage. This covers your liability to others for your at fault accidents. It can happen in the blink of an eye. You sneeze and you rear-end the car ahead. Your insurance company will pay up to the policy limits stated in your policy and provide you with a defense attorney if suit is filed against you.
Minimum limits in the state of Washington is 25k per person and 50 k per carload. For anyone with assets that is obviously not enough. You should purchase as much liability coverage as you need to protect your assets.
Underinsured motorist coverage pays you when another at fault person does not have insurance or does not have enough coverage. Your underinsured motorist limit stacks on top of the underinsured motorist’s liability limit. So if he has 25k and you have 100k you have 125 k available to cover your loss.
You can only buy as much underinsured motorist coverage as you have in liability coverage. So if you purchase 250-500 in liability coverage you can purchase 250-500 in underinsured motorist coverage. This is the coverage that pays you so you want to buy all you can.
A third type of auto coverage is PIP or personal injury protection. This covers your medical bills, some wage loss and some home help. It is your PIP coverage that is primarily responsible to pay your medical expenses in an automobile accident. The reason for the existence of PIP coverage is that the liability carrier will not pay any of your medical expenses until you settle with them. If they accept liability they may pay for your car but not your medical expenses. They do not want to finance your claim and your doctor wants to get paid. If you have regular medical coverage it is secondary to the PIP coverage.
Many people feel it is unfair to have these charges go on their insurance fearing it will cause their rates to go up. Under Washington law, underinsured motorist claims and PIP claims do not cause your rates to go up. At fault accidents and moving violations do cause your rates to rise. Your personal injury attorney will help you understand how all of your coverages work together.