What Does Your Auto Insurance Cover?

Posted on Oct 31st 2009, 01:24 am, under Are You Covered?

When you buy auto insurance, it's not enough to just hand out your money, then sit back and consider yourself set. Are you familiar with the details of what you just bought? You owe it to yourself and your family to know exactly what your insurance covers. Here are several components that may be included in your auto insurance policy:

Property damage liability - If your car damages someone else's property in an accident, this item will cover it. Because this form of coverage exists for the other party's protection, it has become a requirement in practically every single state in the country.

Bodily injury liability - In the worst case scenario, if your car happens to injure or kill someone, this item covers claims made against you for death and injury, as well as legal costs.

Collision coverage - This one covers your car up to its book value in case it sustains damage. Though it is not legally required, most lending institutions require this form of coverage. It carries a deductible (i.e., a certain amount you must pay for each claim before the insurance takes effect). If your deductible is low, then you'll definitely pay a high premium.

Comprehensive coverage - This item insures your car against several non-accident causes, such as fire, flood, theft, and vandalism. Like collision coverage, you'll still have to pay a deductible before you can avail of the benefits.

Uninsured motorist protection - If your car is damaged or its occupants injured in an accident with a motorist that has no insurance, this particular item will cover the costs. It also protects against hit-and-run drivers and motorists with an insufficient amount of insurance ("under-insured" coverage). This is a particularly important form of protection, since up to 30 percent of drivers have no insurance in some states.

Medical payments - An optional item in some states, this insures you against injuries that you or your car's occupants might sustain. However, no-fault states where you need not provide proof of fault to get reimbursed) replace medical payments insurance with personal injury protection.