Auto Insurance Coverage Components

One size DOESN’T fit all in the world of auto insurance. Within limits, policies can — and often should — be customized to fit each buyer’s unique needs and budgetary considerations.

Coverage Within Coverage

Auto insurance is really a package of several different types of coverage with each priced separately and each protecting you from specific losses. Basic coverage typically includes the following sub-coverages:

Liability

Coverage for someone else’s accident-related expenses if you are found to be at fault.

• Bodily Injury Liability pays up to coverage limits for medical expenses, lost wages, and pain and suffering.
• Property Damage Liability pays up to coverage limits for property damage including vehicles and other property.
• Liability coverage can pay legal defense costs if you are sued.
• Minimum liability coverage limits are set by each state, but it may be advisable to purchase higher coverage limits.

Liability coverage is often quoted as three numbers separated by a slash with each number representing the maximum coverage amounts per category for bodily injury per person, bodily injury total per accident, and property damage. For example, a 30/60/25 policy provides $30,000 of injury coverage per person, $60,000 of total injury coverage, and $25,000 of property damage coverage.

Collision

Coverage to repair damage when your vehicle is in a collision, is hit by another vehicle or object (excluding animals) or because of a rollover.

• Pays the actual cash value of your vehicle – not the replacement value – if it’s a total loss.
• Payments are subject to a deductible, which is a specific amount of money you pay before your insurance company begins to pay on a claim.
• Required by most lenders if your vehicle is financed.

Comprehensive

Coverage that pays to repair damage to your vehicle when the cause is something other than a collision with another vehicle.

• Common examples of losses covered by comprehensive coverage include theft, fire, vandalism, flooding, falling objects, windshield damage, hail, or collision with an animal.
• Pays the actual cash value of your vehicle – not the replacement value – if it’s a total loss.
• Coverage is subject to a deductible, which is a specific amount of money you pay before your insurance company begins to pay on a claim.

Medical Payments and Personal Injury Protection

Coverage for you and your passengers’ medical bills, regardless of who is at fault.

• Medical Payments coverage pays for you and your passengers’ accident-related medical expenses only.
• Personal Injury Protection coverage is like medical payments coverage but is more comprehensive and generally pays for medical expenses, lost wages, rehabilitation costs and other medically related accident costs.
• Each state’s insurance laws dictate what is required in this category.

Uninsured/Underinsured Motorist

Coverage for your medical and property expenses when someone else is at fault but doesn’t have insurance or doesn’t have enough.

• Provides coverage if you are in a hit-and-run.
• Although these are two separate types of coverage, they are sometimes bundled together.
• Requirements of this coverage vary by state.