What Does Car Insurance Cover? (Coverage Types)

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Car Insurance Coverage Types

Car accidents can happen to any motorist on the road. Auto insurance coverage can help cover repairs to your vehicle and medical expenses when an accident occurs. An insurance policy is your firewall against a financial disaster. If you are found to be at fault for injuries to other people or damaged property, your auto insurance policy may pay for the loss up to the limits of your policy.

An auto policy may include various types of coverage. It is important to research available coverage and how they protect you. Please note, many policies provide coverage for you and licensed members of your family listed on your policy.

Types of Required Auto Coverage

Different states require a mandatory minimum amount of auto insurance coverage. It is advisable to buy more than your state’s minimum coverage.

These policies are:

• Liability
• Bodily Injury

Liability

Liability insurance offers protection when you are at fault of a covered accident. It provides coverage for the cost of repairs to damaged property resulting from your actions. With liability coverage, it also pays medical bills for injuries sustained in the accident.

Bodily Injury

Bodily injury liability protects you as a policyholder holder when you are found to be at-fault in an accident resulting in injuries to someone else. It also provides coverage for any other person who you permit to drive your vehicle if they are listed as a driver on the policy. The amount of liability coverage is typically expressed in three numbers. For example, 100/300/50.

Here is how to understand those figures:

• $100,000 bodily injury per victim
• $300,000 bodily injury per accident
• $50,000 damaged property per accident

Your car insurer will pay up to your policy’s set limit. You will be responsible for any amounts exceeding those limits.

Auto Coverage That May Be Required

You may be required to purchase personal injury protection, and/or uninsured motorist coverage depending on where you live.

Personal Injury Protection (PIP)

Personal injury protection pays for medical bills for you and anyone else in your car when an accident happens. Personal injury protection is also called no-fault insurance because your injuries are covered no matter who caused the accident.

Beyond paying for hospital bills, PIP may provide coverage with limits for:

• Lost Wages
• In-Home Services
• Child Care Fee
• Rehabilitation
• Funeral or Cremation Cost

Your specific policy defines coverage which varies in every state and the minimum requirements.

Uninsured Motorist Coverage

The law does not permit you to drive without insurance coverage in most states. Unfortunately, some accidents involve drivers who are found to be at-fault and they have no insurance coverage and cannot pay for your injuries or damage to your car. Uninsured motorist (UM) coverage pays for your injuries suffered at the hands of an uninsured driver.

Optional Auto Insurance Coverage

Auto insurance pays for the cost of damages a policyholder may cause to other vehicles. Basic car insurance does not offer coverage for your vehicle. For your insurer to provide coverage for your car, you need to buy optional insurance coverage such as:

• Collision
• Comprehensive

Collision

Collision insurance reimburses an insured driver for damages to their vehicle caused in a collision. This coverage will pay for damages caused by:

• A hit-and-run
• Overturning Your Car
• Crashing into a Ditch
• Potholes
• Crashing into Another Vehicle
• Hitting Objects (Trees, guardrails, Street lights, mailbox, etc.)

To reduce the cost of collision insurance, you may need to consider a higher deductible.

Comprehensive

Comprehensive coverage protects your vehicle from damages caused by non-collision accidents or events. Examples of causes of damage covered by comprehensive insurance are:

• Natural Disasters
• Falling Objects
• Acts of Terrorism
• Fire
• Explosions
• Vandalism and Theft