Auto Insurance Coverages

Auto Insurance Coverages  

Depending on the types of coverage you have, automobile insurance pays for car repair or replacement, medical expenses, rental cars, towing, court costs, and other expenses.

Many insurance companies use the State Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell other policies if the State Department of Insurance has approved the policies…

Read your policy carefully because coverages can vary.  Pay special attention to the exclusions section, which lists the things your policy doesn’t cover. The front page of your policy – called the declarations, or dec, page – shows the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.

Following is a summary of the eight coverages in the  Personal Automobile Policy. Although your coverages and policy terms may be different from these, this summary can help you understand the coverages.

1. Liability Coverage (Basic liability coverage meets the state’s financial responsibility requirement.)

What it pays: The following expenses, up to your policy’s dollar limits, for the people in the other car involved in an accident you, or someone covered by your policy, caused:

  • medical and funeral costs, lost wages, and compensation for pain and suffering
  • car repair or replacement costs
  • car rental while the other driver’s car is being repaired
  • punitive damages awarded by a court.

Liability insurance also pays your attorney fees if someone sues you because of the accident.  If you are arrested following an accident, liability insurance may pay up to $250 for bail.

Who it covers:

  • you and your family members. (Family members include anyone living in your home related to you by blood, marriage, or adoption.  This includes your spouse, children, in-laws, adopted children, wards, and foster children.)
  • other people driving your car with your permission
  • family members attending school away from home
  • spouses living elsewhere during a martial separation might be covered.

You and your family members might be covered when driving someone else’s car – including a rental car – but not a car that you don’t own but have regular access to, such as a company car

Note: Some policies won’t cover other people, including family members, unless they’re specifically named in the policy. Your policy’s declarations page should list the names of all of the people covered by the policy.

 

2. Collision (damage to your car) Coverage

If you still owe money on your car, your lender will require you to have collision and comprehensive coverages.

What it pays: The cost of repairing or replacing your car after an accident. You will only receive the amount of your car’s actual cash value, minus your deductible. Actual cash value is the market value of a car like yours without damages.

Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

3. Comprehensive (physical damage other than collision) Coverage

If you still owe money on your car, your lender will require you to have collision and comprehensive coverage.

What it pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or an event other than a collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won’t pay for an auto theft unless you report it to police.

Payment is limited to your car’s actual cash value, minus your deductible.

4. Medical Payments Coverage

What it pays: Your medical and funeral bills resulting from accidents, including an accident involving a pedestrian or bicyclist.

Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

5. Personal Injury Protection (PIP) Coverage

What it pays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

Who it covers: You, your family members, and passengers in your car, regardless of who caused the accident.

An insurance company must offer you $2,500 in PIP, but you can buy more. If you don’t want PIP, you must reject it in writing.

6. Uninsured/Underinsured Motorist (UM/UIM) Coverage

What it pays: Your expenses from an accident caused by an uninsured motorist or a motorist who did not have enough insurance to cover your bills, up to your policy’s dollar limits. Also pays for accidents caused by a hit-and-run driver if you promptly reported the accident to police.

There is an automatic $250 deductible, which means you must pay the first $250 of the expenses yourself before the company will begin to pay.

There are two types of UM/UIM coverage:

  • Bodily injury UM/UIM pays for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability. There is not a deductible with this type.
  • Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car.

Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.

Insurance companies must offer UM/UIM coverage. If you don’t want it, you must reject it in writing.

7. Towing and Labor Coverage

What it pays: Towing charges when your car can’t be driven. Also pays labor charges, such as changing a tire on the side of the street.

8. Rental Reimbursement Coverage

What it pays: A set daily amount for a rental car if your car is stolen or is being repaired. Your company only pays for repairs that were caused by an event that your policy covers.

 

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