Auto insurance is something we all have to have by law, but how many of us know what coverages we have and what they cover? The time to find out is before you need that insurance policy, no one likes surprises!
Bodily injury covers the person(s) in the other car for injuries and lost wages when the accident is your fault. It usually is shown as "per person" and "per occurence" The per person amount is the most they will pay one person and the per occurrence is the maximum they will pay per accident. For example, if you hit a vehicle with 2 people in the car and your coverages were listed as $100,000/$300,000; those 2 people could each collect a maximum of $200,000 for their injuries.
Property Damage coverage applies to property that is damaged when the accident is your fault. This includes the other person's vehicle and does include any property that you have damaged. For example; if you have $10,000 Property Damage coverage and you damage a Denali, the company will only pay $10,000. Hopefully with that amount of coverage you barely tap it! :o) It also would cover fences, mailboxes, grass, anything that is property.
Medical Payments* coverage is optional in some states and if you have it, it covers each person in your auto up to the maximum coverage. For example; you have 2 passengers in your car and have an accident. Say your medical payments limit is $5000 per person so all 3 of you would each have $5000 for medical bills with regard to the accident.
Uninsured Motorist coverage is an additional coverage and they charge additional premiumn for this. This covers you in the event you were in an accident with someone who does not have insurance to cover your liability and the accident is their fault. For example; you were hit from behind and you were in the hospital with a bill of $20,000. The at fault driver is not insured. Your policy would cover that $20,000 bill.
Underinsured Motorist
This coverage works the same way as Uninsured Motorist. The only difference is, this coverage applies if you were struck by someone who is insured but doesn't have enough insurance. For example; you were rearended and went to the hospital. Your hospital bill is $20,000 and the at fault driver has $15,000 per person liability. His policy would cover the $15,000 and your policy would cover the $5,000.
Comprehensive coverage is optional and it covers your vehicle for damages due to fire, theft, wind, hail, flood, and several other coverages. This coverage always has a deductible which you pay out of pocket in the event of a loss. For example; wind blows a large branch which strikes you car. You get an estimate for $2,000 to repair. You elected a $500 deductible. You pay the repair shop $500 and your policy pays the balance of $1,500.
Collision coverage is optional and it covers your vehicle for damages due to collision or upset. This coverage always has a deductible which you pay out of pocket in the event of a loss. For example; your car was parked in a parking lot and someone collided with your vehicle and left. The damage was $2,000 and you have a $500 deductible. You pay the body shop the $500 and your insurance company pays the $1,500. NOTE: If someone struck your vehicle in the parking lot and stayed, the damage would be covered under his policy under the property damage coverage.
Rental and Towing coverages are usually elective coverages. Rental coverage is based on a per day amount with a maximum which is the per day times 30. This pays your per day amount for a rental car while your car is in the shop for a covered loss. For example; your car was damaged by a tree limb and was brought to the shop for repair. You get a rental car while your's is being repaired. You're policy state $40 a day for this coverage. You use the rental for 3 days, the $120 rental bill will be covered by your policy. Towing coverage may or may not have a limit and will reimburse you if your car needed to be towed for any reason except for a covered loss. If the tow was due to say a collision, it would be covered under your collision coverage and not the towing coverage
Other optional coverages
Check with your agent if you have specific needs that need to be addressed and covered.
And Finally............
These descriptions are basic and does not cover all situations. Any specific issues should be discussed with your agent. I just wanted to explain what the different coverages are so that you know what you're being charged for or what coverages you want on your policy. I can't tell you how many people I have talked to that had no idea what coverages they had or what they wanted.
*Medical payments coverage is not offered in all states, some offer PIP
I have been working in insurance since 1972 and I currently have a license in the state of AZ. I have found after all these years that some agents do not take the time to explain coverages so I thought I would on here. |
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