Jane Dotson
Car insurance is a necessity for drivers, offering financial protection in the event of an accident or damage to a vehicle. While the specific requirements vary across states, there are several common types of auto insurance coverage, including liability, collision, comprehensive, uninsured/underinsured motorist, medical payments, and personal injury protection. Each type serves a distinct purpose, providing coverage for property damage, bodily injuries, medical expenses, and more. Understanding these coverage options is essential for drivers to ensure they have adequate protection in case of unforeseen events.
| Characteristics | Values |
|---|---|
| Purpose | To protect against financial losses in the event of an accident or damage to the vehicle |
| What it covers | Vehicle damage, property damage, bodily injuries, medical bills, funeral expenses |
| Required coverage | Liability insurance, bodily injury liability, property damage liability, uninsured/underinsured motorist coverage |
| Optional coverage | Collision insurance, comprehensive insurance, medical payments coverage, personal injury protection, gap insurance, roadside assistance, rental car reimbursement, new car replacement, accident forgiveness |
What You'll Learn
Liability coverage
Bodily Injury Liability
Bodily injury liability covers the cost of injuries sustained by another person in an accident where you are at fault. This includes the other driver and any passengers they may have. It can also include pedestrians. This coverage will help pay for the medical expenses, rehabilitation, and legal costs of the injured party or parties. It is typically written in split limits, meaning your policy covers a separate amount for injuries to a single person and a single accident. For example, a $25,000/$50,000 bodily injury policy would cover up to $25,000 for a single individual’s medical bills and a total of $50,000 for medical bills across the entire accident. It is important to note that liability coverage does not cover your injuries; instead, it covers the injuries of others resulting from an accident where you are at fault.
Property Damage Liability
Property damage liability covers the cost of repairing damage to another person's property caused by your vehicle. This includes repairs to the other driver's vehicle, a rental vehicle while the other person's car is being repaired, damage to buildings, fences, or other structures, and damage to personal property such as electronics or belongings inside a vehicle. It can also cover legal fees if you are sued for property damage and other related costs. As with bodily injury liability, property damage liability does not cover damage to your own property.
Uninsured and Underinsured Motorist Coverage
Uninsured and underinsured motorist coverage are two additional types of liability coverage that are mandatory in some states. Uninsured motorist coverage pays for your medical bills if you are hit by another driver who does not have insurance or in the case of a hit-and-run accident. Underinsured motorist coverage, on the other hand, pays for medical bills that exceed the at-fault driver's bodily injury liability limits. These coverage types may also cover damage to your vehicle, depending on your policy and whether you have collision coverage.
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Collision coverage
When deciding whether to opt for collision coverage, consider the age of your car, as cars depreciate in value over time. If the cost of collision coverage is more than 10% of your car's actual cash value, it may not be a worthwhile investment. Additionally, think about whether you could afford to repair or replace your car if you were in an accident. Collision coverage can help you get back on the road without the sudden expense of repairs or replacement, although the deductible is usually higher than comprehensive insurance.
Overall, collision coverage provides valuable protection for your vehicle in the event of an accident, giving you peace of mind and helping to keep you financially secure.
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Comprehensive coverage
The coverage limit for comprehensive insurance is the value of your car at the time of the incident. This means that the insurance company will pay out up to your vehicle's value to repair it or pay out its value if it is stolen or damaged beyond repair.
Comprehensive insurance usually comes with a deductible, which is the amount you will have to pay out of pocket for each incident before your insurer pays out. Choosing a higher deductible will result in a lower premium.
It is important to note that comprehensive insurance does not cover mechanical repairs or maintenance. It is also worth considering that if your car is older and has little cash value, comprehensive coverage may not make financial sense, especially if you also have a high deductible.
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Uninsured motorist coverage
There are two main types of uninsured motorist coverage: uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD). UMBI may pay medical bills for both you and your passengers, while UMPD may cover damage to your vehicle. Some states may require a deductible for UMPD, but UMBI generally does not include a deductible.
When deciding on the amount of uninsured motorist coverage to purchase, it is recommended to match the amount of your liability coverage. For UMPD, you can select a limit that closely mirrors the value of your vehicle.
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Medical payments coverage
MedPay can help cover costs such as hospital visits, nursing services, ambulance fees, surgery, x-rays, and dental procedures. It can also help with health insurance deductibles and co-pays. Limits for MedPay typically range from $1,000 to $10,000, and it's generally recommended to carry coverage equal to your health insurance deductible.
It's important to note that MedPay won't cover lost wages if you're forced to miss work due to an accident, and it also doesn't apply if you cause injury to other drivers. Additionally, MedPay won't cover vehicle repairs or damage; for that, you would need collision or comprehensive coverage.
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Frequently asked questions
Liability coverage is required in most US states as a legal requirement to drive a car. It covers damages for injuries and property damage to others for which you become legally responsible resulting from a covered accident. There are two types of liability protection: bodily injury liability and property damage liability.
Collision coverage protects your car from damage in any type of collision, whether another driver is involved or not. It helps pay for the costs of car repairs or replace a covered vehicle. Collision coverage is optional in every state, but it may be required in certain situations, like if you financed or leased your vehicle.
Uninsured motorist coverage protects you and your car against uninsured drivers and hit-and-run accidents. Underinsured motorist coverage, on the other hand, protects you in the event of an accident with a driver whose insurance is not enough to cover the costs.
