What does auto insurance cover?

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What does auto insurance cover? It depends on the coverage you buy. Almost all states have minimum insurance requirements, although they vary from state to state. No matter what coverages you choose, they will always include minimum liability. Some other coverages that you can choose from are PIP, Gap Insurance, Full Motorist, and Uninsured. Understanding the covers can help you decide what to buy to meet your needs.

How does auto insurance work?

When you purchase an auto insurance policy, you select different coverage options to protect yourself and your car. Depending on the coverage you choose, your insurance company will then pay up to a certain limit per type of coverage. Coverage protects you if you are injured, the other person is injured, or if you cause property damage to your own or someone else’s car.

Some types of coverage have a deductible, which is the amount you have to pay, before the insurance company pays its share. You can increase or decrease the amount of your deductible according to your needs and your financial situation. The more types of coverage you buy and the higher your coverage limits, the less out-of-pocket damages you’ll have to pay after an accident, other than the deductible. But, with higher limits and more coverage, the price of insurance is higher.

Minimum liability coverage

Minimum liability coverage is the minimum amount of coverage you can purchase as required by your state. Each state has its own minimum requirements, but almost all require some amount of liability insurance. Depending on the state, you can decline certain coverages, even when they are offered. For example, in Maryland, insurance agents are required to offer PIP coverage, but you can decline it.

Liability for bodily injury

Bodily Injury Liability pays for injuries to the other driver and their passengers if you cause an accident. This coverage pays their medical bills, lost wages and the pain and suffering caused by the accident. Most states require a minimum amount of liability for personal injury. There is no deductible for using this coverage.

Civil liability for property damage

If you cause an accident and damage someone’s property, Property Damage Liability pays for it. Property damage is most often caused to someone’s vehicle, but can also be a fence, mailbox, utility pole, railing, or building. Like personal injury liability, this coverage is usually required and has no deductible.

Coverage for uninsured / underinsured motorists

While not mandatory in all states, Uninsured and Underinsured Motorist coverage protects you if someone hits you and doesn’t have insurance or enough coverage to pay for your injuries and property damage. . Most often, this coverage is used when you are the victim of a hit-and-run, that is, when another driver is at fault and leaves the scene without providing insurance information. If you want protection against uninsured drivers, consider this coverage, even when it isn’t required.

SEED

PIP, short for personal injury protection, is coverage required by some states, although some allow you to forgo coverage. PIP insurance pays if you or your passengers are injured in an accident, no matter who is at fault. It also covers you as a passenger in someone else’s vehicle. If you include PIP coverage on your auto insurance, it covers (up to the maximum limit chosen):

  • Medical fees
  • Lost wages
  • Funeral expenses
  • Childcare
  • Household services

Child care and housekeeping services are only covered if needed while you are recovering from your injuries. The amount you can buy varies by state and there is no deductible for using this coverage.

Medical payments

Medical payment coverage covers the medical expenses you incur if you are injured in an accident, no matter what the fault. If you select this coverage, it follows you when you walk, cycle, use public transport, drive your own or someone else’s car, or if you are a passenger. Like PIP, there is no deductible to pay for the coverage.

Full coverage auto insurance

With minimum liability coverage, you are missing out on physical damage coverage for your own car. If you want the insurance company to pay for repairs to your car as part of a covered claim, consider full coverage auto insurance. The national average cost of full coverage auto insurance is $ 1,674 per year. However, your rate may be different depending on your driving history, location, coverage, and deductible selected.

Collision

Collision insurance covers damage to your car caused by hitting another vehicle, object or property, regardless of fault. A deductible will apply to this coverage and is based on the deductible you choose for the policy.

Full

Comprehensive insurance, also known as non-collision coverage, covers damage to your car that is not covered by a collision. This includes:

  • Broken windows or windshields
  • Hitting an animal
  • Theft Auto
  • Vandalism
  • Weather events

As with collisions, the deductible you choose for full coverage applies when you file a full claim.

Other types of coverage

Most insurance companies offer additional coverage that you can get in addition to comprehensive coverage. While options vary from state to state, other types of coverage could include:

  • Gap insurance: This coverage is for drivers who finance or lease their car. If your car is destroyed in an accident, the gap insurance will pay the difference if your totaled car is worth less than you owe.
  • New car replacement: If your car is only a few years old and you have full coverage, you may be eligible for this coverage. With a new car replacement, if your car is totaled, you get the value to replace your car with the same year, make, and model, instead of the depreciated value.
  • Roadside assistance: This coverage pays for the service to help you if your car breaks down. Coverage varies, but generally includes towing, key locking, fueling, battery starting, and tire changes.

Who is covered by my auto insurance policy?

People listed as insured drivers on your auto insurance policy are covered to drive your car. If you give someone not listed or in your household permission to drive your car, that is also covered. Keep in mind that if they have an accident, it is your insurance policy.

What does auto insurance not cover?

Your auto insurance policy will detail what is and is not covered by your policy. Some things are not covered by auto insurance:

  • Damage beyond coverage limits: When you buy auto insurance, you choose the limits you will pay. The policy statements page will describe your limits, which is the maximum amount your auto insurance company is required to pay. You take care of the rest, which is why most insurance experts recommend buying as much coverage as you can afford.
  • Special vehicles: High-value, exotic, performance, or vintage cars may not be covered by a standard auto insurance policy. Some companies offer specialized insurance policies tailored to the needs of these types of vehicles.
  • Maintenance and repairs : Auto insurance does not cover regular maintenance and normal wear and tear. You are responsible for paying to keep your car running, including regular maintenance as recommended by the manufacturer. Some insurance companies may offer mechanical failure insurance, which may provide some coverage.
  • Carpooling : If you are carpooling, there is a gap in coverage where you are not covered. You should check what coverage the rideshare company offers and whether you need to purchase specific ridesharing insurance.

Frequently Asked Questions

What is the best auto insurance company?

The best auto insurance company is the one that meets your needs and coverage requirements. You may have to shop around to find the right insurance company for you.

How do I know the amount of auto insurance I need?

The amount of auto insurance you need is up to you once you’ve met the state’s requirements. Determine whether you need minimum or full coverage and which limits and deductibles are best. Once you’ve determined the coverage you need, get quotes from multiple companies to get the best price.


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