Auto Insurance Incidentals: What's Covered And What's Not?

Whether auto insurance covers incidental costs depends on the type of insurance and the circumstances of the incident. Basic auto insurance policies typically include bodily injury liability, personal injury protection, property damage liability, collision, comprehensive, and uninsured/underinsured motorist coverage. However, personal auto insurance policies usually do not cover business-related incidents or accidents, and they do not cover damage to your own car. To cover damage to your own car, you would need to purchase optional auto insurance coverages such as collision or comprehensive insurance.

Personal injury protection (PIP)

PIP covers medical expenses, lost earnings, and other reasonable and necessary expenses, such as household help and transportation to medical providers. It also provides payments for lost income, child care, and funeral expenses related to the accident. In some states, PIP is mandatory, while in others, it is optional. The minimum coverage requirements vary by state, with some states, like New York, requiring up to $50,000 per person in basic No-Fault coverage.

PIP is different from liability insurance, which covers expenses like personal injury to others when the policyholder is at fault or damage to a vehicle. Liability insurance does not cover the policyholder's medical expenses or their car repair or replacement costs. PIP is also different from collision and comprehensive insurance, which covers damage to the policyholder's vehicle.

Overall, PIP provides financial protection and peace of mind for individuals involved in car accidents, ensuring that they can receive the medical care and support they need during their recovery.

Collision coverage

The cost of collision coverage can vary depending on factors such as the value of your car and the chosen deductible. A higher deductible will result in a lower monthly premium, but it is essential to consider your ability to pay for repairs under the deductible amount. Collision coverage typically reimburses you for the costs of repairing your car, minus the deductible.

When deciding whether to opt for collision coverage, it is worth considering the value of your vehicle and the potential costs of repairs. Collision coverage can provide peace of mind and help you avoid paying out-of-pocket expenses for repairs or replacements in the event of an accident.

Additionally, collision coverage is often required by lenders or leasing companies. If you are financing or leasing a vehicle, you may be mandated to purchase collision coverage as part of your auto insurance policy. This ensures that the lender's investment is protected in case of any damage to the vehicle.

Comprehensive coverage

For example, if your car has a low cash value and you can afford a high deductible, comprehensive coverage may not be worthwhile. On the other hand, if your vehicle has a high cash value, or you cannot afford the cost to repair or replace your vehicle out of pocket, comprehensive coverage could be a smart move.

Business use

If you use your vehicle for business purposes, it's important to understand whether your auto insurance covers this usage. The answer depends on the type of insurance you have, the nature of your business, and the vehicle's usage. Here's a detailed overview of auto insurance coverage for business use:

Personal Auto Insurance:

Personal auto insurance typically covers personal driving, such as commuting to work, running errands, or taking trips. However, it usually does not provide coverage if you use your vehicle for commercial purposes, such as delivering goods or providing transportation services (e.g., ride-sharing or delivery services). It's important to note that insurance companies view business drivers as a higher risk than personal drivers because they are on the road more often and are more likely to be involved in accidents.

Commercial Auto Insurance:

If you use your vehicle for business purposes, you may need to purchase commercial auto insurance or add an endorsement to your existing policy. Commercial auto insurance covers business vehicles owned by the company or used for business purposes. This includes vehicles used for ridesharing, food delivery, or transporting work equipment. It is typically required by state law and can provide liability coverage, collision coverage, and comprehensive coverage. Commercial auto insurance can protect your business from the costs of accidents, including repairs, medical bills, and legal fees.

Hired and Non-Owned Auto Insurance (HNOA):

If you or your employees use personal or rented vehicles for work-related tasks, such as business errands, client meetings, or transporting goods, you may need HNOA insurance. HNOA covers the costs associated with accidents that occur while driving for business purposes, including damage to other vehicles, property damage, and bodily injury to other parties. It's important to note that HNOA only covers third-party liability costs and not damage to your own property.

If you use your personal vehicle for business purposes, it's crucial to inform your insurance provider. Some personal auto insurance policies may cover certain business uses, but it depends on the insurer and the specific policy. Comprehensive car insurance, for example, may cover your vehicle for damage caused to a third party's property or vehicle in an accident, as well as damage to your car. However, other types of personal insurance, such as Third Party Fire and Theft or Third Party Property Damage, may not provide adequate coverage for business use.

Additional Considerations:

When insuring your vehicle for business use, it's important to be transparent with your insurer about how you use your vehicle. This includes disclosing information such as the purpose of the vehicle, the number of kilometres driven per year, and any modifications made to the car. Additionally, consider the value of the goods or equipment you transport and whether you need a higher level of coverage, such as a commercial policy.

In conclusion, while some personal auto insurance policies may provide limited coverage for business use, it is generally recommended to purchase specialised insurance, such as commercial auto insurance or HNOA, to ensure adequate protection for your business-related activities. By understanding the different types of insurance and their coverage, you can make an informed decision about the most suitable option for your business needs.

Vandalism

Comprehensive coverage will cover vehicle damage that is beyond your control, including intentional damage to your vehicle, such as vandalism. Vandalism includes slashed tires, broken windows, and any type of defacing of the vehicle, like a car that gets keyed. It's important to note that comprehensive insurance will not cover any personal items within the car if they are stolen during a vandalism incident. Coverage for personal belongings would come from renters or homeowners insurance.

If you have comprehensive coverage and your car has been vandalized, it's important to begin the claims process as soon as possible. Here are the steps you should take:

• Inventory the damage: Evaluate the harm done and take notes. Check if anything inside the vehicle was stolen or damaged, and take photos of the damage.
• File a police report: Contact the authorities and file an official report as soon as possible. A promptly filed police report can help support your insurance claim.
• Contact your insurance company: Provide as much information as possible, including the official police report. Your insurance company's representative can help you decide if you should file an auto insurance claim and may send an insurance assessor to evaluate the damage.

It's worth noting that filing a vandalism claim could result in an increase in your insurance rates, depending on your insurer and state. Additionally, if the repairs cost less than your comprehensive deductible, it may not be worth filing a claim.

To protect your car from vandalism, you can take some preventive measures, such as removing valuables from your vehicle, parking in well-lit areas or covered garages, and installing a car alarm system.

Frequently asked questions