5 summer vacation insurance problems

When you go on vacation, your insurance goes with you. It's designed to cover unexpected, unfortunate events — and they can and do happen on vacation.

Knowing what your insurance policies cover gives you peace of mind if something unfortunate happens while you're on vacation. Knowing what your policies exclude is also useful. Here's how your insurance plays a role in some vacation scenarios.

Scenario No. 1

You're backing your vehicle out of a crowded restaurant parking lot in another state and you hit a parked car.

What is covered: Your auto liability insurance covers you in all accidents, regardless of what state you are in. The Insurance Information Institute (III) recommends you carry $100,000 of bodily injury protection per person and $300,000 per accident. Other insurance industry experts also recommend buying a minimum of $50,000 in property damage liability coverage (otherwise known as 100/300/50). This should protect you in the majority of accidents.

You hit a parked car?

But even if you buy the minimum requirements in your home state and become involved in an accident in another state, your liability limits will automatically increase to the minimum limits in that state.

For example, let's say you live in Connecticut and you're vacationing in Rhode Island. If you carry Connecticut's minimum liability limits of 20/40/10 and you are found at fault in an accident, your coverage in Rhode Island will automatically go up to that state's minimums of 25/50/25. So if it costs $12,000 to fix the other person's vehicle, you will have enough coverage to pay for the accident even though you bought only the minimum Connecticut coverage of $10,000.

You and your family are traveling out of state. You stop your car at a traffic light at a busy intersection. Suddenly, another car rear-ends you. The damage to your vehicle is significant and your spouse and two children have minor injuries.

What is covered: Who picks up the tab for your medical expenses depends on the state in which the accident occurred. If the accident does not occur in a no-fault state, the other driver's liability insurance would pay for your family's medical expenses and car damage.

You got rear-ended?

If you live in a no-fault state — Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah or the U.S. territory of Puerto Rico — and the accident occurs in a no-fault state, your personal injury protection (PIP) or medical payments coverage (MedPay) will cover the medical expenses of you or your family members. If your injuries exceed a certain amount, you may sue the other driver for pain and suffering.

If the accident occurs in a no-fault state and you do not live in a no-fault state yourself, and thus you do not have PIP or MedPay, you will still get the minimum amount of PIP or MedPay protection based on the state you are in. Most car insurance policies contain a section called "out-of-state coverage" or "financial responsibility and no-fault laws" under which you would automatically receive the required minimum PIP coverage if you get into an accident in a no-fault state. For example, if someone from Connecticut (not a no-fault state) were driving through New York (no-fault state) and got into an accident there, that driver would automatically get the minimum New York PIP coverage.

The question of who pays for property damage is more cut-and-dried, regardless of whether the crash occurs in a no-fault state. The damage to your car should be paid for by the other driver's liability insurance because if he is at fault. If that person is uninsured, or negligent in reporting the claim, you can file a claim on your own collision insurance (if you have it) and pay your deductible, or make a claim on your uninsured motorist property damage coverage (more on this below).

While on vacation in Cape Cod, Mass., you are hit by a New Hampshire driver who does not have auto liability insurance because his state does not require it. He is found at fault in the crash.

What is covered: You can make a claim on your uninsured motorist coverage to pay for any medical expenses you incurred as a result of the crash. Since the accident took place in Massachusetts, you are subject to the no-fault laws in that state, which restrict pain-and-suffering lawsuits. According to Massachusetts law, you have the right to sue the New Hampshire driver if you sustain more than $2,000 in medical expenses.

An uninsured driver crashed into you?

As for property damage, the New Hampshire driver will have to pay you out of his pocket to fix your car. While New Hampshire does not require its motorists to buy liability insurance, it does require that they show "financial responsibility," meaning they must show they have the financial means to pay for an accident they cause. This often entails posting a bond with the state department of motor vehicles after getting into an accident that was their fault. If they fail to show financial responsibility, their license is subject to suspension.

If the New Hampshire driver refuses to pay for your property damage, you can make a claim on your collision coverage (if you have it). You would have to pay your deductible, but your insurance company could seek payment from the other driver and you may get your deductible back. If you have uninsured motorist property damage (UMPD) insurance, you could make a claim on that coverage. If you don't have collision or UMPD, you can sue the other driver for your repair bills.

One other wrinkle: The New Hampshire driver can be cited by a police officer for driving without car insurance in Massachusetts. If you don't have auto insurance and drive in a state where it's required, you'll have to pay a fine.

While running on the beach, your 5-year-old son slips and falls on some rocks. He requires a visit to the emergency room to get stitches in his leg.

What is covered: Most health insurance plans cover visits to the emergency room, no matter where the accident happens. That means that a Florida resident vacationing in California is covered for an emergency room visit in that state.

Injured on the beach?

However, you may face some problems if you have a managed care plan and require several days of hospital care. If you require extensive medical attention and you land in an out-of-network hospital, it's possible that your HMO may direct you to an in-network hospital and pay for the expenses only if you stay there.

Check with your employer's benefits administrator or contact your HMO directly prior to leaving for vacation so you know what's "in-network." Also, have the phone number for your HMO and your insurance card handy in case a medical question arises and you need to contact them.

You return from the beach and discover that your hotel room has been burglarized. All of your possessions have been stolen.

What is covered: Most of your losses may be covered under your home insurance. Jeanne Salvatore, a spokesperson for III, says that most home insurance policies will cover all of your belongings if they are stolen "off site," meaning stolen while they are away from your home.

Stuff stolen from your hotel room?

However, some home insurance policies will pay only up to 10 percent of your coverage. For example, if you have $60,000 worth of belongings covered under your homeowners insurance, only $6,000 would be recoverable under your policy if they were stolen on vacation.

You may buy special endorsements to your home insurance policy for such items as camera equipment or expensive jewelry. Some policies will also reimburse you for cash stolen up, to a particular amount. For example, if $500 is stolen from your room, a standard policy will only reimburse you for $200.

"In terms of consumer tips, I would first see if there is coverage by the hotel or with the credit card used to pay for the room," Salvatore recommends.