What is covered by a basic auto policy?
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.
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.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
7. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you for cost of renting a car.
The rental reimbursement coverage is exclusively for accident cases. This means for example, you cannot use the rental reimbursement to get a rental after you drop off your car for normal check up. You also cannot use the box to impress a date with an upscale rental car. Additionally, rental reimbursement is not synonymous to rental car insurance that you might buy out from a car rental company. The rental car insurance covers for damages you might cause to the rental car but not the cost of getting a rental car. Your auto insurance policy will also factor in rental car insurance.
Insurance Glossary Terms:
Collision deductible waiver – In states where it’s available, you’re required to buy a collision deductible waiverin conjunction with your collision coverage. The collision deductible waiver pays your collision deductible if your insured car is involved in an accident in which an uninsured motorist is held legally responsible. If you have a high deductible this is especially helpful!
Full Permissive Use: A policy that will extend the full liability limits a driver not listed on the policy.
At one time or another most of us will let a friend use our vehicle. Whether its running to the store to get some last minute items for the BBQ or a quick test drive of your new sports car its almost impossible not to let someone use your vehicle during the life of ownership. Most car insurance policies cover these temporary uses under whats known as “Permissive Use Coverage”. This provides coverage for anytime you lend your vehicle to other individuals and they become involved in an accident. Permissive use coverage is usually part of standard car insurance policies however there are many exclusions so before handing your keys to anyone for the first time always contact your car insurance company to confirm you/they will be covered.
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