What Does a Basic Auto Insurance Policy Cover?
Understanding Coverage for Your Vehicle
Auto insurance requirements vary by state, but most basic policies include six main types of coverage. Here’s what you need to know about each one.
While additional options such as gap insurance are available, a standard auto insurance policy typically consists of:
- Bodily injury liability
- Personal injury protection (PIP)
- Property damage liability
- Collision coverage
- Comprehensive coverage
- Uninsured/underinsured motorist coverage
Each type of coverage is priced separately, leading to variations in policy costs and limits.
Bodily Injury Liability
This coverage pays for injuries that you, the designated driver, or the policyholder cause to another person. It also applies to family members listed on the policy when driving someone else’s car with permission.
Having sufficient liability coverage is crucial because serious accidents can result in costly lawsuits. It is recommended to carry more than the state-required minimum to protect valuable assets such as your home and savings.
Medical Payments or Personal Injury Protection (PIP)
PIP covers medical expenses for the driver and passengers in the policyholder’s vehicle. In its broadest form, it can also cover lost wages, rehabilitation costs, and services the injured person can no longer perform. Additionally, it may cover funeral expenses.
Property Damage Liability
This coverage pays for damage you (or someone driving your car with permission) cause to another person’s property. While it primarily applies to other vehicles, it can also cover damage to structures such as fences, buildings, lamp posts, and telephone poles.
Collision Coverage
Collision coverage pays for damage to your vehicle resulting from a crash with another car, an object (such as a tree or pole), or from flipping over. Damage from potholes is also covered.
This coverage usually comes with a deductible. If you are at fault, your insurance will reimburse you for repair costs minus the deductible. If another driver is responsible, your insurer may seek reimbursement from their insurance company, which may also include the cost of your deductible.
Comprehensive Coverage
Comprehensive coverage reimburses you for loss due to theft or damage caused by events other than a collision. This includes fire, falling objects, explosions, earthquakes, storms, floods, vandalism, riots, or collisions with animals like deer or birds. It also covers windshield repair if it is cracked or shattered.
Comprehensive insurance generally has a separate deductible, but some insurers offer glass coverage without one.
Uninsured and Underinsured Motorist Coverage
This coverage protects you, your family members, or a designated driver if any of you are hit by a driver without insurance or with insufficient coverage. It also applies in cases of hit-and-run accidents or if you are struck as a pedestrian by an uninsured or underinsured driver.
Post a Comment