Choosing a car insurance which fits all your needs and also the needs of that loved family, needs you to spare time and find the right insurance. But before that, it’s mandatory that you learn the basics to auto insurance.Auto insurance is not just meant to protect your car from theft or accidental damage but also if you cause injuries to other people or damage their auto (read property) in that accident. Yes, the auto insurance policy has the protection plan entirely spelled out for you and your car.
The auto insurance policy is the bare minimum contract between you and the insurance company. In return to a set of coverages selected by you, as the customer, you pay a certain amount which is called the “premium” to the insurance company. It is your policy that decides what the insurance company will or will not cover.
At a very high level, there are 4 basic things that an auto insurance majorly provides— coverage for any kind of damage that occurs to your car(s), liability coverage, coverage for all kinds of medical expenses and un-insured motorist coverage, for scenarios where some person without mandatory/required insurance injures you or any of your family member. There are many kinds of coverage options available which keep varying from state to state and company to company.
Common Auto Insurance Coverage
All coverages are always subject to terms, limits and conditions that the actual policy has spelled when you purchased it.
- Physical injury liability coverage: This is a coverage which pays off for damages that caused physical injuries, when you are responsible for an accident, to the driver & the co-passengers in the vehicle you have hit. It also gives coverage that defends you, if you are being accused because of a car accident.
- Property damage liability coverage: It usually pays damages to other person’s property (for e.g. their truck or their car) when it’s you who is the person held responsible for the accident. Again, it also gives coverage that defends you, if you are being accused because of a car accident.
- In addition to medical payments coverage, some states have a personal injury protection (PIP) in place. This is also called as a no-fault coverage. It can generally be used to pay funeral expenses, medical expenses, income loss and other expenses that incur for the injuries or even death due to any bodily injury that happened due to the car accident.
- Medical payments coverage: It usually covers you, the relatives with whom you reside and the co-passengers for any sort of medical expenses that happen from injuries caused in a car accident. In case you are a pedestrian and you are the person hit by a vehicle, it also covers you.
- Comprehensive coverage: It generally pays for damage that occurs to your car in case of theft or in case it is damaged due to any other cause other than collision, such as theft, hail, fire or vandalism.
- Uninsured motorist physical injury coverage OR Not sufficiently insured motorist physical injury coverage: It generally pays for the bodily injury damages to you and the passengers in your car when caused by someone else in an auto accident. It also pays for the person who is held legally responsible; either has insufficient or no insurance. This coverage again, varies a lot based on state.
- Collision coverage: It usually pays for the damage that occurs to your car, only if it hits another object, car or overturns. Again, a deductible obviously is still applied to this kind of coverage.
- We have some others as towing coverage, rental coverage, funeral expense, etc.
Auto policy consists of three main parts:
- Declaration page – the declarations page of the auto insurance clearly displays information specific to you and the policy. This usually includes the name of the person who is the policyholder, his/her policy number, limits of liability, the policy term, and deductibles selected by the person and also, obviously the policy premium. It might also display various other items such as the other drivers listed on your policy, the discounts applicable to your policy and the specific vehicles that have been insured. Additionally, it shows the other documents that are the conglomeration that makes your policy. It tells you as to what base policy has been chosen with the endorsements that make it up. And hence this declarations page is always lengthier (mostly more than just one page).
- Base Policy – it is a document which spells out the basic provisions/offerings of the insurance coverage and the responsibilities covered by the insurance company. It also brings forward your responsibilities, which are not limited to paying the premium timely, but also covers telling the company when you are met in/by an accident.
- Endorsements – this is a document that can alter the base policy very similar to making an amendment which can be done by altering a contract signed by two parties. It can hence update, broaden, limit or delete the entire coverage or change even the base policy in some way or the other.
So, buy a car, insure your life and insure the car too… Safe riding, Happy riding.