Personal Auto Insurance 101

This coverage covers for bodily injury you may do to someone else with your vehicle.

For Example: If you are in an accident and people in another automobile are injured it will help protect you from lawsuits.

This is one of the coverages that states will require. Generally, you will see coverages that are either split limits or combined single limits. (see the other insurance terms section below)

This covers for damage to other people’s property with your vehicle. This could be another vehicle, fence, building or any other form of property.

This is one of the most overlooked coverages and generally most people do not purchase enough coverage. The state may require a small amount of this coverage, but costs to fix vehicles are increasing.

For Example: You purchased the state minimum property damage coverage and get into an accident with a brand-new Mercedes. The damages may exceed the amount of coverage you carry. If sued, it will also cover your legal defense.

This covers your medical bills and lost wages or even childcare when you or even your passengers are injured in an accident. 

Some states have minimum requirements for PIP Coverage. Although this may overlap with your health insurance plan or medical payments coverage, it’s still a valuable coverage to have.

Also known as “No Fault Insurance” this covers you or passengers, regardless of who was at fault. Whereas bodily injury coverage covers other drivers and other people outside of your vehicle, this coverage protects YOU and your passengers. Plus, if you are unable to perform essential services, you can tap into this coverage for those lost wages or childcare expenses.

This covers you for medical expenses related to injuries sustained in an auto accident for you or your passengers.

This is an optional coverage, but extends to give some extra coverage when necessary. Some states do not even offer PIP (no fault) coverage, so this fills the void in coverage for those states. Other states will offer this coverage on top of PIP (no fault) coverage.

Whereas PIP (no fault) coverage allows you to pay for lost wages or childcare in the event you are unable to perform, Medical Payments coverage is ONLY for medical bills and expenses.

This coverage is for you or passengers in your vehicle who are injured because of the negligence of an Uninsured or Underinsured driver. You may seek compensation for injuries and damages through this coverage, up to the limit on your policy.

For Example: You get into a bad car accident and you are seriously injured. Even though the other driver was at fault, you find out that he only has the state minimum coverage. Your medical bills pile up and exhaust the other driver’s coverage limits. If you have uninsured/ underinsured motorist coverage, your policy will pay out for the other driver not having sufficient coverage.

A good rule of thumb is to purchase Uninsured/ Underinsured Motorist Coverage for the same limits that you have in Bodily Injury Coverage. This way, whatever you are doing to protect other drivers, you are protecting yourself as well, in spite of drivers who cut corners to save an extra buck.

This coverage pays for damage to your vehicle due to an accident with another vehicle or property, providing a safety net in the event your vehicle is damaged and needs to be repaired or replaced.

Whereas property damage coverage covers other vehicles that you cause damage to, collision coverage protects YOUR vehicle and allows you to fix it up back to how it was prior to the accident.

This coverage is always required by banks for a loan or a lease on a vehicle. They will also have maximum deductibles you can take.

While other coverages on your policies are based on limits of coverage, generally this coverage is shown to you based on deductible. Deductibles are what your portion of the claim will be. You are responsible for the deductible, and then all the other damages over and above that amount will be paid by the company.

Comprehensive, or Other Than Collision coverage pays for damage to your vehicle that is caused by fire, theft, vandalism, flood, falling trees, natural disasters or hitting an animal. A common claim for comprehensive coverage is generally a broken windshield.

This coverage is always required by banks for a loan or a lease on a vehicle.

While other coverages on your policies are based on limits of coverage, generally this coverage is shown to you based on deductible. Deductibles are what your portion of the claim will be. You are responsible for the deductible, and then all the other damages over and above that amount will be paid by the company.

Sometimes companies will include glass coverage with a $0 deductible. Called Full Glass, check your policy details as some companies offer all windows covered with no deductible, others will only cover the windshield with no deductible.

This helps you cover the costs you incur for renting a car when your car is disabled or getting fixed due to an accident.

Most companies will not allow you to use this coverage for a breakdown: It must be the result of an accident or covered loss.

Generally, companies will set you up with a specific rental car service and provide you with everything you need, allowing you minimal or no out of pocket expense. Of course, you can select your own rental and ask for the company to reimburse you.

You will just need to be more knowledgeable of the actual limits you have and what you are allowed to rent. We always advise allowing the company to assist you, as it is a seamless, pleasant experience.

This covers you for costs you incur for having your vehicle towed from the scene of an accident.

Some companies will not allow you to use this coverage for a maintenance breakdown and will only allow you to use in the event of an accident.

Always check your policy as well as the limits to your towing coverage. Sometimes there is a distance associated of the max you can travel for the tow. Costs over the towing limit will be your out of pocket expenses.