Insurance, Insurance, Insurance! Who Needs Insurance? You!
Many bright consumers can become confused when it comes time to purchase insurance policies. Here is a brief guide to help you when you are shopping for auto insurance for you and your family.
Your auto policy may include six coverages. First, auto insurance policies may contain bodily injury liability coverage. This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission. It is very important that you carry enough liability insurance to protect you and your family in the event you or your family member causes damages to someone else. You should definitely seriously consider buying more than the state-required minimum to ensure you and your family are protected.
Second, auto insurance policies may contain medical payments coverage ("medpay").
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, it can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Third, your policy may contain property damage liability. This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
Fourth, your policy may contain collision coverage. This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you are not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.
Fifth, comprehensive coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
Sixth, your policy may contain Uninsured and Underinsured Motorist Coverage. This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or Hit-and-Run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian. Underinsured motorist coverage is vitally important and as with bodily injury liability coverage, it is recommended that you carry well over the state minimum.