Automotive Insurance

Understanding the Basics and Available Coverages

Auto insurance is a contract between you and an insurance company that protects you financially in the event of an accident, theft, or other damage to your vehicle. It is designed to cover the cost of repairing or replacing your vehicle, as well as any medical expenses or liability claims that may arise from an accident.

Coverage Scope:

• Liability Only: Mandated in each state. Provides protection to the other vehicle when you are in an at-fault accident, but does not cover your vehicle or injuries to people in your car including you. In some states, you may also receive Personal Injury Protection (PIP) as well.
• Full Coverage: Necessary if you have a loan. In addition to liability coverage, this generally includes Comprehensive and Collision coverages to protect damage to your vehicle. It also allows you to add additional coverages like Uninsured/Underinsured Motorist coverages too.

Core Coverages

• Liability: This is the most basic type of vehicle insurance coverage required by law in most states, protecting you from financial responsibility if you cause an accident and injure others or damage their property. It's often divided into two main parts:
  • Bodily Injury Liability: This covers medical expenses, lost wages, and other costs associated with injuries sustained by others in an accident you cause. It also covers legal fees if you are sued due to the accident.
  • Property Damage Liability: This covers the cost of repairing or replacing someone else's property (e.g., another vehicle, fence, trailer, or building) that is damaged in an accident you cause.
• Personal Injury Protection (PIP): Typically includes lost wages and other expenses resulting from an accident for anybody in your vehicle. Required in these states.

Common Optional Coverages

• Comprehensive: This coverage protects your vehicle from non-collision-related damages, such as theft, vandalism, fire, natural disasters, falling objects, and collisions with animals. Often required by lenders if you have a loan.
• Collision: This coverage pays for damage to your vehicle resulting from a collision with another object, such as another vehicle, tree, or guardrail. It can also cover damages from a single-vehicle accident, such as rolling over or hitting a pothole. Often required by lenders if you have a loan.
• Uninsured Motorist: Protects you financially if you're in an accident caused by a driver who has no insurance. Covers medical expenses, lost wages, property damage, and pain and suffering resulting from the accident. This is great for added protection against hit and run collisions.
• Under Insured Motorist: Protects you financially if you're in an accident caused by a driver who has insufficient insurance to cover your damages. Covers medical expenses, lost wages, property damage, and pain and suffering resulting from the accident.
• Medical Payments: Regardless of who is at fault in an accident, Medpay covers reasonable medical bills for injuries sustained in an accident.

Other Common Insurance Policies:

These are add-on features you can purchase for further protection. Some common options include:

• Business Use Endorsement An add-on to your personal car insurance that extends coverage to situations where you use your personal vehicle for business purposes.
• Gap Coverage: This add-on covers the difference between the actual cash value of your vehicle and the amount you still owe on your car loan or lease in the event of a total loss.
• Roadside Assistance: This endorsement provides coverage for towing, jump starts, flat tire changes, and other emergency roadside services.
• Rental Car Reimbursement: Covers the cost of renting a car while your own vehicle is being repaired after a covered accident or loss.
• Full Glass: This option waives the comprehensive deductible for repairs or replacements to your glass.
• Custom Parts and Equipment: Covers aftermarket accessories or modifications to your vehicle, like custom wheels, paint job, electronic upgrades or other custom changes.
• Rideshare: Covers you and your vehicle when you use your car and while waiting for rideshare (Uber, Lyft) or a delivery service (Doordash).

You may be interested in

• Bundling Discounts: When you insure your home and auto policies with one company, they usually give you generous discounts on all policies. Some insurance companies require bundling of your home and auto policies.
• Umbrella Insurance: Offers extra liability protection, usually starting at $1,000,000 in coverage, above and beyond the standard limits of your home and auto policies. Depending on the carrier and state laws, this typically includes your motorcycle, RV, boat, ATV, snowmobile and your other vehicles too.

It's crucial to have adequate insurance coverage that reflects your needs and the value of your vehicle. Not having enough coverage can lead to substantial financial burdens in case of an accident. It is also important to review your policy regularly to make sure you have the right amount of coverage for your needs.