Auto Insurance: What's Covered?

Car insurance policies varies from state to state. They are consisting of a package of different coverage elements which together form your policy. Most states require you to carry automobile insurance, at least liability coverage on your auto. (This is to protect the person you hit, not you.) If you intend to protect your own auto, assets or personal property against loss it would be advisable to purchase more than just the minimum liability coverage. Given to high cost of replacing a automobile today, collision and comprehensive coverage are included in most automobile insurance policies.

Auto insurance policies normally include coverage for up to six distinct risks, each of which is priced separately.

Bodily Injury Liability

 For injuries the policy holder causes to someone else.

Liability coverage is the foundation of any auto insurance policy, and is required in most states. If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to others in the accident, including your legal bills. Bodily-injury coverage pays for medical bills and lost wages. Property-damage coverage pays for the repair or replacement of things you wrecked other than your own car. The other party may also decide to sue you to collect "pain and suffering" damages.

Medical Coverage

Medical and Personal Injury Protection (PIP) for treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident.

This will pay for your and your passengers' medical expenses after an accident. These expenses can arise from accidents while you're driving your car, someone else's car (with their permission), and injuries you or your family members incur when you're pedestrians. The coverage will pay regardless of who is at fault, but if someone else is liable, your insurer may seek to recoup the expenses from him or her.

Personal injury protection (PIP) and broader "no-fault" coverage are expanded forms of medical payments protection that may be required in your state. Some states have optional PIP or no-fault coverage. Expanded features include payments for lost wages and child care.

If you have a good health insurance plan, there might be little need to buy more than the minimum required if at all. And, if you already have disability insurance, there's little reason to purchase higher-than-minimum amounts of PIP.

Property Damage

For damage the policyholder caused to someone else's property.

Collision

For damage to the policyholder's car from a collision.

If you cause an accident, collision coverage will pay to repair your vehicle. You usually can't collect any more than the actual cash value of your car. Collision coverage is normally the most expensive component of auto insurance. By choosing a higher deductible, say $500 or more, you can keep your premium costs down. However, keep in mind that you must pay the amount of your deductible before the insurance company kicks in any money after an accident.

Comprehensive

For damage to the policyholder's car that doesn't involve a collision with another car. Covered risks include fire, theft, falling objects, missiles, explosion, earthquake, flood, riot and civil commotion.

Uninsured motorists

For treatment of the policyholder's injuries as a result of collision with an uninsured driver.

Uninsured motorists (UM) coverage pays for your injuries if you're struck by a hit-and-run driver or someone who doesn't have auto insurance. It is required in many states.

Underinsured motorists (UIM) coverage will pay out if the driver who hit you causes more damage than his or her liability coverage can cover. In some states, UM or UIM coverage will also pay for property damages.

You'll probably want to have at least the minimal amount of UM/UIM because if you can't find the other driver, you'll at least have some coverage for pain-and-suffering damages.

No state requires car owners to carry insurance for all these risks. But many states require drivers to carry minimum amount of liability insurance for bodily injury and property damage, as well as personal injury protection coverage.

Add-on Elements

 Car rental  coverage,   Towing car coverage,  Auto replacement gap coverage.

Check the state pages for individual states' auto insurnace policy and law.

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