Personal Auto Insurance Coverage: What Does It Include?

Personal auto insurance is a type of financial protection that covers the costs if you hurt someone or damage their property with your car. Depending on the type of insurance policy you have, it can also cover damage to your own vehicle when you are and aren't driving. Basic auto insurance policies typically include bodily injury liability, personal injury protection, property damage liability, collision, comprehensive, and uninsured/underinsured motorist coverage.

Bodily injury liability

In the unfortunate event of an accident, Bodily Injury Liability Coverage will cover the medical expenses of those injured, including emergency care and ongoing care costs. This coverage also extends to situations where the injured individuals have to miss work or are unable to work due to their injuries. In some cases, it may also cover claims involving emotional distress or prolonged pain resulting from the accident.

Another important aspect of Bodily Injury Liability Coverage is its ability to provide financial assistance in the event of a fatality. This coverage will help pay for funeral costs, ensuring that the bereaved family does not have to bear the full financial burden during their time of grief.

When reviewing your auto insurance policy, it is essential to understand the limits of your Bodily Injury Liability Coverage. These limits are usually presented in a "number/number" format, such as 100/300. The first number represents the per-person limit, while the second number indicates the per-accident limit. For example, with a 100/300 limit, your insurance would pay up to $100,000 for one person's medical expenses and a maximum of $300,000 total if four people are injured in the accident.

It is worth noting that state requirements for Bodily Injury Liability Coverage may not be sufficient for your needs. Depending on your assets and potential risks, you may want to consider purchasing higher levels of coverage to ensure adequate protection. Consulting with a licensed insurance agent can help you determine the appropriate amount of coverage needed to safeguard your financial well-being.

Medical payments or personal injury protection (PIP)

Medical Expenses

PIP covers necessary medical procedures and reasonable expenses related to rehabilitation following a car accident. This includes ongoing professional care, such as doctor's visits, hospital stays, surgery, and physical therapy. In some states, PIP may also cover certain home care expenses, such as childcare or house cleaning, if the insured is unable to perform these tasks due to their injuries.

Lost Wages

If the insured is unable to work due to their injuries, PIP can provide reimbursement for lost wages. This helps ensure that the individual can continue to support themselves and their family during their recovery.

Funeral Expenses

In the unfortunate event of a fatality resulting from a car accident, PIP can provide coverage for funeral expenses and accidental death benefits. This helps alleviate the financial burden on the deceased's family during a difficult time.

It is important to note that PIP has coverage limits, and the specific benefits may vary by state. Additionally, PIP does not cover property damage or bodily injuries to other drivers and their passengers. To ensure adequate protection, it is recommended to have both PIP and liability insurance, as they serve complementary roles in providing financial protection in the event of a car accident.

Property damage liability

When choosing your property damage liability coverage limit, it is worth considering whether you own a home or other expensive items, whether you travel in high-traffic areas, and whether there are a lot of expensive vehicles in your area. If you answered yes to any of these questions, you may want to consider raising your coverage limit.

Uninsured and underinsured motorist coverage

Uninsured Motorist (UM) coverage comes into effect when you are involved in an accident with a driver who has no auto insurance or insufficient insurance to cover the costs of the accident. This coverage extends to both you and your passengers, ensuring that any injuries or damages sustained are not left unpaid. In some states, UM coverage also includes hit-and-run accidents, providing additional peace of mind.

Underinsured Motorist (UIM) coverage, often offered alongside UM coverage, is crucial when the at-fault driver's insurance policy limits are inadequate to cover the full extent of your damages. This type of coverage ensures that you are not left struggling to pay for medical bills or vehicle repairs, which can be costly.

The specifics of UM and UIM coverage can vary depending on your state and insurance provider. In some states, UM coverage is mandatory, while others give you the option to purchase it. It is important to note that even if your state does not require UM coverage, it is highly recommended for all drivers to have this protection. Without it, you could be at significant financial risk if involved in an accident with an uninsured or underinsured driver.

UM coverage typically includes Uninsured Motorist Bodily Injury (UMBI) and Uninsured Motorist Property Damage (UMPD). UMBI helps cover medical expenses for you and your passengers, while UMPD covers the cost of repairing or replacing your vehicle. Similarly, UIM coverage is divided into Underinsured Motorist Bodily Injury (UIMBI) and Underinsured Motorist Property Damage (UIMPD), ensuring that both your medical and property damage expenses are addressed.

When it comes to filing a claim, it is important to understand the process and any requirements. In some cases, you may need to first submit a claim to the other driver's insurance company before turning to your own UIM coverage for reimbursement of remaining damages. Additionally, it is worth noting that your insurance company will only pay your claim if the uninsured or underinsured driver is legally responsible for your damages.

In summary, uninsured and underinsured motorist coverage is a vital component of auto insurance, offering financial protection in the event of an accident with an uninsured or underinsured driver. By understanding the specifics of this coverage, you can ensure that you are adequately protected and know what steps to take in the unfortunate event of an accident.

Collision coverage

Unlike some other types of auto insurance, collision coverage is not legally required in any state. However, if you lease or finance your vehicle, your lender may require you to have collision coverage to protect their investment. If you own your vehicle outright, you may choose to forgo collision coverage, but this means that you will have to pay out of pocket for any repairs or replacements if you are found at fault in an accident.

When deciding whether to opt for collision coverage, it is important to consider the value of your vehicle and your ability to pay for repairs or a replacement vehicle out of pocket. If your vehicle is brand new or worth a significant amount, collision coverage can provide peace of mind and help you pay for expensive repairs or a replacement if needed. On the other hand, if your vehicle is older and not worth much, collision coverage may not be worth the cost.

It is also worth noting that collision coverage does not apply to collisions with animals or damage caused by events outside your control, such as a falling tree. These types of incidents are typically covered under comprehensive coverage. Additionally, collision coverage does not cover injuries or damage caused to another driver and their vehicle; instead, your liability coverage would apply in such cases.

Frequently asked questions