This article was designed to break down the different parts of auto insurance so you can better understand them. There are usually common misconceptions about insurance in general. So before you decide on a certain insurance coverage, read this article first to be prepared.
Auto Insurance Categories:
1. Bodily Injury Liability: Basically, bodily injury is insurance that you have in case you hurt someone else involved in the accident. This is the part of the insurance that covers lost wages and any medical bills. All states require that a person have certain minimum bodily injury coverage. This is required by law and cannot be removed.
2. Civil Liability: Like bodily injury, this insurance covers material damage. This includes crashing into trees, fences, poles, other cars, etc.
Note: It is important that you have enough coverage on both. In turn, you could be sued for any amount your insurance doesn’t cover. Example: You have 65k cover and did 100k damage. Now he becomes personally responsible for the other 35k.
3. Personal Injury Protection, PIP – This pays 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 expenses. Half of the states require this coverage. If you have good insurance, this is one you can either bypass or meet state requirements.
4. Collision and Comprehensive: Collision is when your car is damaged. If your car is around 70% or more damaged, they will consider your car totaled. Typically, people take a higher deductible on this coverage. Keep in mind that you’ll need to pay these costs before your insurance picks up. Comprehensive is the damage is the damage that is done outside of an accident. This includes: vandalism, natural disaster, etc.
5. Uninsured/Underinsured Motorist – This is an important insurance to consider, although it is only required in a few states. This insurance starts when the person you were in an accident with does not have insurance coverage, it is not enough, or you were involved in a hit and run incident.
Hopefully this article has helped address some of the concerns when it comes to coverage. It is important to consider each section carefully and determine the limits you want to set. It’s always better to be safe than sorry, however, you don’t want to overpay for insurance if you don’t need to. Insurance can be very expensive if you don’t know what you’re looking for. Also, before you sign up for a new policy, be sure to check with the company and see what discounts are available to you. You can also research online to be more aware of what is actually available. Moral of the story, do a little checking on the specifics of the company and insurance before committing.
