The Ultimate Guide to Understanding Auto Insurance Coverages

Contents

1 Introduction
2 Liability Insurance
3 Property Damage Coverage
4 Medical Payments Coverage
5 Uninsured Motorists Coverage
6 Collision Coverage
7 Comprehensive Coverage
8 An auto insurance policy is a contract between you and an insurance company. It’s important to know what your policy covers.
9 Conclusion

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Introduction

Driving a car is a privilege and it’s important to understand the risks involved. Many people assume that auto insurance is just about protecting your vehicle, but it actually covers much more than that. Your auto policy also protects you and your family from financial loss in the event of an accident caused by you or by someone else on the road (like an uninsured driver).

Liability Insurance

Liability insurance covers the cost of injuries to others and property damage caused by your vehicle. It is required by law in most states, but can be purchased in different levels of coverage, from $25,000 to $1 million.

Liability insurance pays for medical bills and other expenses if you’re at fault in an accident that results in injury or death on the road. If you don’t have enough liability coverage, then drivers who suffer injuries will sue you for damages–and those lawsuits can get expensive!

Property Damage Coverage

Property damage coverage is the portion of your auto insurance that covers damages to other people’s property. If you accidentally hit someone else’s car, or if they hit yours and cause damage, this type of insurance will help pay for repairs to the other driver’s vehicle.

Property damage coverage is required in most states (with some exceptions). Most states also require that drivers carry liability insurance–a minimum amount of property damage coverage–in order to drive legally on public roads.[1] However, even if your state doesn’t require it by law, we recommend getting at least enough property damage coverage so that if something happens while driving around town or out on the highway and another driver suffers damages as a result, they’ll be able to get their car fixed without having any financial hardship caused by their accident.[2]

Medical Payments Coverage

Medical payments coverage is a type of auto insurance that can help you pay for medical expenses if you or your passengers are injured in an accident. It covers both the insured driver and all other passengers in the vehicle, regardless of who is at fault for causing the accident.

Medical payments coverage also helps cover some costs if someone else hits your car and leaves without identifying themselves or paying any damages they may have caused (a hit-and-run). In these cases, medical payments coverage will cover up to $1 million per person and $3 million total per incident–even if you don’t have collision or comprehensive coverage on your auto policy!

Uninsured Motorists Coverage

Uninsured motorist coverage is a type of liability insurance that protects you if you are in an accident with an uninsured driver. It also covers injuries from hit-and-run accidents, so long as the at-fault driver was not identified or located by the police within 30 days of the incident. Uninsured motorist coverage pays for medical bills and lost wages if you or your passengers get hurt in either situation–and it doesn’t matter if they’re pedestrians, bicyclists or other drivers who were involved in another vehicle crash (as long as their car does not have insurance).

If an uninsured motorist causes damage to your car, then uninsured motorist property damage will cover repairs costs up to whatever limit has been set on this policy (usually $10K-$25K).

Collision Coverage

Collision coverage is designed to pay for damage to your vehicle caused by an accident. If you are at fault, collision coverage will cover the cost of repairs or replacement if your car is damaged in a collision. This kind of coverage is optional, but it’s often required by lenders if you want to finance a new car purchase. The amount of collision coverage you purchase should be based on the value of your vehicle (or what’s left after depreciation).

Comprehensive Coverage

Comprehensive coverage is a type of auto insurance that covers damage to your car from events other than a collision. It’s important to understand the difference between comprehensive and collision, because the two coverages work together to protect you and your vehicle.

Comprehensive coverage pays for damages caused by:

Fire or theft (your car is stolen)
Vandalism (someone smashes your windows)
Natural disasters (flooding or hail)

In contrast, collisions are caused when two vehicles collide with each other in an accident. If you hit another car or object while driving, then it falls under collision coverage.

An auto insurance policy is a contract between you and an insurance company. It’s important to know what your policy covers.

An auto insurance policy is a contract between you and an insurance company. It’s important to know what your policy covers, so that you can make sure it meets all of your needs.

When buying an auto insurance policy, consider these questions:

What does my current policy cover?
Do I need additional coverage? If so, what kind do I want (liability or comprehensive)?
How much will additional coverage cost me per month or year in addition to my base rate premium quote from the agent/broker who sold me our base rate quote?

Conclusion

We hope that you have a better understanding of auto insurance coverage. It can be confusing, but it’s important to know what your policy covers and how much it costs before buying one. If you find yourself needing more information on this topic, feel free to check out our other blog posts!