What is in a basic auto insurance policy?
Your auto policy may include six coverages. Each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies only to injuries you, the designated driver or policyholder cause to someone else in an auto accident. Anyone in your family including yourself listed on the policy are covered when driving someone elseís car with their consent.
Itís vital to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. This could result in a lost of personal assets such as your car, personal valuables as well as your home. It is probably worth buying more than the state-required minimum to protect personal 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 in 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 in some insurance policy plans.
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 only means damage to someone elseís car, but it also includes various outdoor objects such as telephone poles, buildings, fences or any other objects your vehicle hits.
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 on the street. Collision coverage is usually sold with a deductible of $300 to $1,000. The higher your deductible, the lower your premium will cost you. Even if you caused the accident, your collision coverage will reimburse you for the costs of fixing your car, subtracting the deductible. If the accident is not your fault, your auto insurance company will usually go after the insurance company of the person at fault. If they are successful, you'll also be reimbursed for the deductible.
This part of the coverage reimburses you for any loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or cows.
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. This usually is not needed, but in the rare cases of an unexpected earthquake or fire, can definitely keep you on your feet.
Comprehensive auto insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible. Windshields can range as low as $99 to over $1000 in the higher end cars. Most of the time, the windshields are around $200-$500 dollars.
States do not require that you purchase collision or comprehensive coverage, but if you have a car loan, your lender may ask that you carry the comprehensive auto coverage until your loan is paid off.
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. There are a number of uninsure drivers on the road today, so this is definitely useful if you have a decent car.