January 14, 2019
Been shopping around for auto insurance but you’re befuddled by all the options?
Auto insurance is a common type of insurance we purchase, but that doesn’t mean it can’t be confusing. Buying the right policy for your needs begins with understanding typical coverages.
Read on for a quick reference guide to auto insurance coverage.
Liability coverage is the basis
One of the most important types of insurance is liability protection. Liability insurance is what steps in to help protect you when you are at fault in an accident. Most auto insurance policies contain two types of liability insurance.
Bodily injury liability: Bodily injury liability coverage helps protect you if you injure someone in an accident. The coverage will contribute towards the injured person’s medical bills.
Property damage liability: Property damage liability works just like bodily injury, only it helps pay to repair the property you’re responsible for damaging. For example, the coverage helps pay to fix someone’s car if you rear end them or to replace a guardrail if you slide off an icy road.
First party physical damage coverage
So now you may be thinking, “That’s great, but what if my car gets damaged?” Good point. You may purchase coverage on your auto policy to help protect your car if it’s damaged. This would usually be referred to as physical damage coverage. There are two main types:
Comprehensive: Comprehensive should help cover your vehicle if it’s damaged in anything other than a collision accident. For example, if a tree limb falls on it, it has damage from a hail storm, is flooded, or stolen, you would make a comprehensive claim.
Collision: Collision coverage repairs your car if it’s in a collision accident. Also, you may use your collision coverage no matter who’s at fault for the crash. Physical damage coverages may come with a deductible. That’s the part you’re responsible for paying if you need the coverage, so choose carefully. Deductibles may range from $50 to $2,500.
Medical payments coverage
Medical payments coverage helps pay for you and your passengers’ medical bills if you’re injured in an accident. Typically, the coverage can be used regardless of fault. It’s usually primary to your health insurance, so it would pay out first in that case.
While those are the most significant and common auto insurance coverages, many companies offer add-on coverages that may be of some benefit. Two are:
Roadside assistance: Roadside assistance can be purchased from some insurers and will help pay for towing or emergency services such as a tire change or jump start. Each insurance company has different limits on coverage, so make sure you know what they are and what would be covered.
Rental reimbursement: Rental reimbursement coverage would help pay for a rental car for you up to a certain length of time and dollar limit. The coverage would kick in if your vehicle is in the shop due to a covered loss.
Each state has different minimum auto insurance requirements for drivers. These are usually referred to as state minimums. While state minimum limits would get you on the road legally, they typically don’t offer the best option for coverage. Speak to a qualified insurance professional about getting the best auto coverage for your needs in your state.
Auto insurance needs differ among drivers
Everyone has different auto insurance needs. There are many factors to consider including how much you drive, the types of vehicles you own, and what kind of assets you need to protect.
This article is for informational purposes only and is not intended to promote any certain insurance products, plans, or strategies that may be available to you. Before enacting a policy, seek the advice of a qualified insurance agent.