Your auto
policy may include six coverages. Each
coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries that you,
the designated driver or policyholder, cause
to someone else. You and family members
listed on the policy are also covered when
driving someone else’s car with their
permission.
It’s very important to have enough liability
insurance, because if you are involved in a
serious accident, you may be sued for a
large sum of money. Definitely consider
buying more than the state-required minimum
to protect assets such as your home and
savings.
2. Medical Payments or Personal Injury
Protection (PIP)
This coverage pays for the treatment of
injuries to the driver and passengers of the
policyholder's car. At its broadest, PIP can
cover medical payments, lost wages and the
cost of replacing services normally
performed by someone injured in an auto
accident. It may also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or
someone driving the car with your
permission) may cause to someone else's
property. Usually, this means damage to
someone else’s car, but it also includes
damage to lamp posts, telephone poles,
fences, buildings or other structures your
car hit.
4. Collision
This coverage pays for damage to your car
resulting from a collision with another car,
object or as a result of flipping over. It
also covers damage caused by potholes.
Collision coverage is generally sold with a
deductible of $250 to $1,000—the higher your
deductible, the lower your premium. Even if
you are at fault for the accident, your
collision coverage will reimburse you for
the costs of repairing your car, minus the
deductible. If you're not at fault, your
insurance company may try to recover the
amount they paid you from the other driver’s
insurance company. If they are successful,
you'll also be reimbursed for the
deductible.
5. Comprehensive
This coverage reimburses you for loss due to
theft or damage caused by something other
than a collision with another car or object,
such as fire, falling objects, missiles,
explosion, earthquake, windstorm, hail,
flood, vandalism, riot, or contact with
animals such as birds or deer.
Comprehensive insurance is usually sold with
a $100 to $300 deductible, though you may
want to opt for a higher deductible as a way
of lowering your premium.
Comprehensive insurance will also reimburse
you if your windshield is cracked or
shattered. Some companies offer glass
coverage with or without a deductible.
States do not require that you purchase
collision or comprehensive coverage, but if
you have a car loan, your lender may insist
you carry it until your loan is paid off.
6. Uninsured and Underinsured Motorist
Coverage
This coverage will reimburse you, a member
of your family, or a designated driver if
one of you is hit by an uninsured or
hit-and-run driver.
