Auto Insurance Coverages Explained
An auto insurance policy actually consists of several different coverages. Required in most states, it is something all drivers must posses.
This coverage is the basis of all auto insurance policies, and the minimum required in most states. If you're found at fault in an accident, liability insurance pays for the injury and property damage expenses of the third party involved in the accident. Property damage pays for the replacement or repair of anything that was damaged. Bodily injury expenses cover lost wages and medical bills. If you cause a major accident, your current or potential coverage may not cover you sufficiently. It is a safe bet to buy more than the minimum required by your state.
If you're found at fault in an accident, collision coverage will cover expenses needed to repair your vehicle. Collision coverage is usually the most expensive component of an auto insurance policy, although it isn't required. Insurance companies might proclaim your car a “total loss” if the repairs exceed the market value of the car. When this occurs, the insurance company will pay you the actual cash value, minus the deductable. From there your car is off to an auction where it will be sold for parts or scrap.
Actual Cash Value (ACV)
The value of your car when it is damaged or destroyed. Insurance companies figure the ACV by subtracting the depreciation from the replacement cost.
Comprehensive coverage will pay for damages to your vehicle that were not caused by an accident. This includes fire, vandalism, theft, natural disaster, and even animals. Depending on the damage, the insurance company will pay the cars worth right before the incident. This is also optional coverage.
Uninsured Motorist Coverage
Uninsured motorist coverage helps pay the cost of damages to your car in the event that you are hit by a driver who does not have car insurance. Uninsured motorist coverage also pays for your and your passengers' medical care for injuries related to the accident up to the amount that your policy would have covered for the other person had the accident been your fault. Hit-and-run accidents are included under this policy as well. Accidents involving bikes and pedestrians may also be covered; ask your prospective provider to be sure. Some states package uninsured and underinsured motorist into a single coverage. This coverage will protect you in the case you are involved in an accident with either an uninsured driver or an underinsured driver.
Medical Payments Coverage
Medical Payments Coverage typically helps protect you, covered passengers and covered family members. It provides payment for reasonable and necessary medical treatment for bodily injury caused by a covered accident, regardless of who was at fault. That treatment includes, among other things, x-rays, surgery, ambulance, physicians, hospital, and funeral expenses.[Get a quote now!]