This article was designed to break down the different automobile insurance parts so you can better understand them. There are typically common misconceptions on insurance in general. So before you decide to go with certain insurance coverage, read this article first so you are prepared.
Categories of Automobile Insurance:
1. Bodily Injury Liability: Basically, bodily injury is an insurance you carry in case you do hard to someone else involved in the accident. This is the insurance part that cover lost wages and any medical bills. All states require a person to carry a certain minimum coverage of bodily injury. This is required by law and can not be removed.
2. Property Liability: Just as bodily injury, this insurance covers property damage. This includes running into trees, fences, poles, other cars, etc.
Note: It is important you carry sufficient coverage on both of these. You could, in turn, be sued for any amount your insurance does not cover. Example: you have 65k in coverage and did 100k in damage. You now become personally liable for the other 35k.
3. Personal Injury Protection, PIP: This pays for your medical bills and lost wages for you and any passengers involved in the accident. If in the case of death, it also covers funeral costs. Half the states require this coverage. If you have good insurance, this is one you can skip or carry state requirements on.
4. Collision and Comprehensive: Collision is when your car is damaged. If your car is damaged around 70% or more, then they will consider your car totaled. Typically, people take a higher deductible on this coverage. Bear in mind that you will have to pay these costs before your insurance takes over. Comprehensive is damage is damage that is done outside of an accident. This include: vandalism, natural disaster, etc.
5. Uninsured or Underinsured Motorist: This is an important insurance to consider even though it is only mandatory in a handful of states. This insurance starts when the person who you got into an accident with does not have insurance coverage, not enough or you were involved in a hit and run incident.
Hopefully this article has help address some of the concerns when dealing with coverage. It is important to consider each section carefully and determine limits that you want to set. It is always better to be safer than sorry, however, you do not want to be paying for excess insurance if it is not needed. Insurance can get very expensive if you do not know what you are looking for. Also, before signing on a new policy, make sure you check with the company and see which discounts are available to you. You can also do research online so you are more aware of what is actually available. Moral of the story, do some checking up on the company and insurance specifics before you commit.
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