Insurance Coverage – Liability, Comprehensive and Collision Coverage
Car Insurance coverage is comprised of many different types like liability, comprehensive and collision. Some of these like liability is typically mandatory while others like collision is optional. What kind of full coverage do you need depends on your particular situation. If you have an older car, it may not make sense to have comprehensive and collision coverages. We have put together information on different types on
insurance coverage so you can make an informed decision for your personal insurance needs.
Liability coverage:
Liability Insurance coverage is typically required by all states in the United States. This will typically cover any bodily damage (physical harm to another person) resulting from a car accident if it is your fault. This will also cover property damages (like automobiles, road signs, houses etc.) if you are found to be the guilty party in an insurance claim.
The liability insurance is typically written as three numbers like 25/50/25. If you carry such a policy, this means that you have maximum coverage in the amount of $25,000 for bodily injury damage per person, maximum coverage of $50,000 for bodily injury damage per accident and amount of $25,000 for property damage per accident. Different states in America set their own limits of liability insurance coverage. You can get that information from this website:
Minimum Liability insurance
What do all these insurance coverage mean? That first number 25 means that the Insurance company will pay for things like medical bills, hospital fees and lost wages in the amount of $25,000 insurance coverage. If there are multiple people injured in an accident, this will limit coverage in the amount of the second number 50 ($50,000) that was mentioned above. The last number 25 is for property damage insurance coverage. The insurance company will pay upto $25,000 insurance coverage for things like other autos involved in the accident, any road signs or property items like fences and household items that were destroyed in the accident. This is again assuming that you were at fault in the accident. If we reverse the scenario and another person is at fault, then their insurance company will be responsible for not only damage to their vehicle but also to your auto, your medical bills and property damages.
Let's say that you live in Nevada and have 15/30/10 liability coverage and you are involved in an accident where you were at fault. In addition, several people get hurt in that accident unfortunately. If an ambulance is called which takes one or more people to the hospital, you will be held liable for payment of any medical expenses. If your insurance limit is only $30,000 per accident, and the total bills happen to be around $50k, you will be responsible for this amount.
$50k - $30k= $20,000!!
As such it is recommended that typically you carry 100/300/100 coverage or at the very least 50/100/50.
Comprehensive and Collision Coverage
Comprehensive and collision on the other hand are necessary to cover damages to your car. When you are involved in a car accident, the insurance company will pay for damages to your vehicle minus any deductible that are specified in your insurance policy.
Collision insurance will help you pay for any damages to your car in the event of an accident, hence a collision! This insurance policy typically carries a deductible, an amount between $250 to an amount of $1000. This deductible portion is typically paid by you (if you are at fault in an accident) and the rest of the damages are covered by the insurance company. Let's say you are involved in an accident and the damage to your SUV is around $4000. If your deductible is $500, this means is that your insurance company will pay you the following for damages.
$4000 - $500 = $3500
Most often they will just cut you a check in that amount and you can take the car to any body shop that you like for repairs.
Comprehensive is for damages that are not due to a traffic accident. It can include things like fire, damage, theft, vandalism, hit and run and natural disasters like tornadoes, hail damage or a big FAT deer in the road! A deductible still applies in this scenario, just like the collision policy. If you have an older car, lets say more than 10 years, it is recommended that you do not carry Comprehensive and Collision.
Auto Medical payments and No-fault option
Auto medical payments will pay for medical expenses incurred by you or the passengers in an accident. It does not matter if you are at fault or not, this option will cover any medical expenses like ER visits, doctors' fees and hospital charges. Some states have No-fault or PIP (Personal Injury Protection) also. Just like the Auto Medical payments, this will pay for medical expenses in addition to lost wages (Earnings you had to forgo due to injury). PIP coverage will also pay for lost wages if the passengers are injured and unable to perform their regular work duties.
Uninsured motorist and Underinsured motorist
Sometimes you may be involved in a hit and run accident or where the person responsible for the accident does not have any coverage. If you are not at fault, having Uninsured motorist will pick up the tab. In a similar fashion, Underinsured motorist kicks in when someone else is at fault, however they do not have enough insurance to cover all the expenses. In this scenario your Underinsured motorist policy will take care of the expenses.
Related Links for Insurance Coverage
-Insurance Coverage definitions from CarInsurance.com
