Your Auto Insurance: What's Covered And What's Not

Auto insurance is a contract between you and your insurance company that protects you against financial loss in the event of an accident or theft. It is a legal requirement in most states and offers financial protection if you cause a car accident. It covers injuries or property damage after an accident, at least up to the policy's limits.

Auto insurance provides coverage for property damage, liability, and medical costs. It also covers uninsured motorist coverage, underinsured motorist coverage, collision coverage, comprehensive coverage, medical payments coverage, and personal injury protection coverage.

While auto insurance is essential, it doesn't cover every car-related expense. For example, it typically doesn't cover routine maintenance, stolen belongings, rideshare trips, or the cost of a new car.

Liability coverage

The cost of liability coverage depends on various factors, including the coverage limit selected. The coverage limit refers to the maximum amount your policy will pay for injuries or property damage caused by you. It is typically expressed as three numbers, such as 25/50/10, indicating the coverage for bodily injury per person, bodily injury per accident, and property damage per accident, respectively. You can choose a coverage limit that matches or exceeds your net worth to ensure your assets are well-protected.

While liability coverage helps cover damages you are responsible for, it does not cover damages to your own property or injuries you sustain in an accident. To protect yourself in such cases, you may need additional coverages such as personal injury protection, collision coverage, or comprehensive coverage.

Medical coverage

The purpose of MedPay is to help cover out-of-pocket expenses that may not be covered by your health insurance policy or other types of auto insurance coverage. For example, if you have a high-deductible health plan or one with many out-of-pocket costs, MedPay can help pay for those expenses. MedPay can also cover your health insurance deductible and help with co-pays. In some cases, MedPay may even cover funeral costs in the event of a motor vehicle accident.

It's important to note that MedPay coverage is limited to medical expenses only and does not cover lost wages or other types of damages that may result from an accident. MedPay coverage limits are usually low, often $10,000 or less, and are intended to cover immediate medical and funeral expenses. The cost of MedPay varies depending on the state and insurer, typically ranging from $2 to $37 per month.

When deciding whether to add MedPay to your auto insurance policy, consider your health insurance coverage, budget, and medical needs. If you have health insurance that covers medical expenses related to an accident, you may not need as much MedPay coverage. However, if you don't have health insurance or have limited coverage, MedPay can provide valuable peace of mind and financial protection in the event of a car accident.

Collision coverage

• An accident involving only your car, such as rolling over.
• An accident with another object, such as a telephone pole, fence, mailbox, or a guard rail.
• An accident with another vehicle, whether parked or in motion.

It's important to note that collision coverage only reimburses you for damage to your own car. It does not cover damage to other vehicles or objects, or any bodily injuries sustained in the accident. Collision coverage is generally optional but may be required in certain circumstances, such as when you finance or lease a vehicle.

The cost of collision coverage depends on factors such as the policy limits, the deductible, and the current market value of the vehicle. The higher the deductible, the lower the cost of the insurance. Collision coverage can provide valuable financial protection in the event of an accident, helping to reduce your out-of-pocket expenses. However, it may not be necessary for older or less expensive vehicles, as the cost of coverage may outweigh the potential benefits.

Comprehensive coverage

The cost of comprehensive coverage varies depending on several factors, including personal details such as age, gender, marital status, and driving record, as well as the vehicle's characteristics and location. When filing a claim, you will need to pay a deductible, typically ranging from $100 to $500, before the insurance company covers the remaining balance.

Uninsured motorist coverage

In some cases, underinsured motorist coverage may also be offered alongside uninsured motorist coverage. This type of coverage protects the policyholder if they are hit by a driver whose insurance coverage is insufficient to pay for the damages or injuries caused. Underinsured motorist coverage typically includes underinsured motorist bodily injury (UIMBI) and underinsured motorist property damage (UIMPD) coverage, which function similarly to their uninsured motorist counterparts.

It is worth noting that uninsured motorist coverage also usually applies to hit-and-run accidents, providing financial protection if the at-fault driver cannot be identified. This can include coverage for both bodily injuries and property damage, depending on the specific policy and state regulations.

While uninsured motorist coverage is not mandatory in all states, it is a valuable form of protection for drivers. Without it, individuals may be left to cover the costs of medical bills, vehicle repairs, and other expenses out of their own pocket. Therefore, it is essential to carefully consider the potential risks and benefits when deciding whether to include uninsured motorist coverage in your auto insurance policy.

Frequently asked questions