What Does an Auto Insurance Policy Cover?
If you drive, there’s no question that you need auto insurance coverage to protect you financially. But if you’re like many people, you know that car insurance protects you but you’re not sure quite how. An auto insurance policy is detailed, specific and usually in “legalese,” so you should have your agent explain every aspect. Before you do, however, it’s a good idea to have a working knowledge of the six main types of recommended auto insurance coverage:
Collision
Collision coverage protects you if your car is damaged in an accident, no matter whether it was hit by another car or an inanimate object, or your car caused the accident. This coverage pays for car repairs, or if your vehicle was totaled, it reimburses you for the vehicle’s value minus the deductible you chose when you bought the policy.
Bodily Injury Liability
If there’s an accident involving another person, whether caused by you or someone who had permission to drive your car, bodily injury liability coverage pays any damages. It doesn’t cover your medical expenses but it does protect against claims filed against you by the injured party to cover their medical expenses, pain and suffering, lost wages and other losses. Since accident lawsuits are common, it’s important to have enough bodily injury liability coverage to protect you.
Property Damage Liability
Any damage caused to someone else’s property by you or someone driving your car with your permission is covered by the property damage liability section of your policy. Covered items include other vehicles, buildings, fences, utility poles or virtually any type of structure your car could hit.
Comprehensive
Comprehensive coverage is the companion to collision coverage, because it protects you against theft or other types of damage, including fire, vandalism, windstorms, hail, collisions with animals, flying objects and broken windows. There are many exclusions included under comprehensive coverage, so be sure to understand what’s covered and what isn’t in your particular policy.
Personal Injury Protection (PIP)
PIP coverage pays for medical treatment for both for you and anyone injured as a result of an accident involving your car. Lost wages are also often covered, as well as funeral expenses. Only some states mandate that you carry PIP coverage but it’s wise to carry it even if it isn’t required because of the important protection it offers.
Uninsured and Underinsured Motorist
Uninsured motorist coverage will protect you if have an accident caused by a driver who doesn’t have insurance or who flees the scene before you can get contact information. Underinsured motorist coverage protects you if you’re in an accident with at-fault driver who doesn’t have enough insurance coverage or other resources to pay for damages.
Although these six categories are standard, every policy is different. That’s why you should have your agent explain the specifics of your particular coverage.