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Understanding your Auto Coverages

Updated: May 13, 2022

Coverage Type:

Coverage for OTHERS:

Bodily injury liability

The part of your liability coverage that pays for medical bills if you've injured someone in an accident

Property damage liability

The other part of liability coverage, covers the cost of property damage you've caused in an accident


Coverage for YOU:

Medical Expense/Personal injury protection

Covers medical expenses for you or your passengers after an accident

Uninsured/underinsured motorist

Covers YOUR medical costs if you're in an accident caused by a driver with little or no car insurance


Coverage for your VEHICLE:

Comprehensive

Covers damage to your car that happens when you're not driving, or if caused by an animal

Collision

Covers damage to your car after a car accident, no matter who was at fault

Choosing policy limits

When you choose the coverage components that you want to make up your car insurance policy, you will also choose the limits for each type of coverage. A limit is the maximum amount your insurance company will pay you out for a covered claim.


For example, if you only have $25,000 worth of property damage liability coverage, and you get in an accident and cause $35,000 worth of damage to someone else’s vehicle, your insurance company will only be able to pay out $25,000 because that is your policy limit, and you’d be on the hook for the remaining $10,000.

This is why it's important to have higher limits than your state's mandated minimums, because higher limits means you pay less out of pocket if you get into an accident or if your car is damaged in a separate event. We recommend liability limits of at -least- $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability, often written as 100/300/100.

Additional car insurance coverage

Beyond liability, comprehensive and collision coverage, there are some extra coverage add-ons that you may want to consider adding to your policy.

Other additional coverages include:

  • Roadside assistance coverage: Usually not needed if you’re already a member of an auto club like AAA, but it could come in handy if you are not.

  • Rental car reimbursement: When your car is in the shop or you’re waiting for it to be replaced, your insurer can cover the cost of renting a car in the meantime.

  • Loan/Lease Coverage: Covers the "gap" between your car’s depreciated cash value and the amount you still owe on its lease or loan. Gap insurance comes into play when your car is a total loss or has been stolen and not recovered.

  • New car replacement coverage: New car replacement pays to replace your car with a comparable one if it's totaled in the first year or two of ownership.




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