Common Car Insurance Coverages Explained

Car insurance isn't just another card to carry in your glove box. Since almost all states require you to carry some form of liability insurance to drive, odds are you already have a policy, but whether that policy is suitable for you and your circumstances is a different question.

Liability Coverage

This is the kind of coverage you probably already have if you're a driver. Almost all states require you to carry auto liability insurance.

Liability coverage pays for the damage you cause if you get into an accident, up to certain limits and exclusions outlined in your policy.

It typically covers your liability for both bodily injury (medical expenses for others) and property damage (repairs to others property). It's important to note that liability coverage does not cover your car or your medical expenses - only the damage you cause to other people and their property in an accident would be covered.

Collision and Comprehensive

Collision and comprehensive coverage are usually optional but can help cover your property in the event of damage.

Collision coverage provides coverage for your car in the event of an accident, regardless of who's at fault and minus your deductible. This type of coverage typically applies to a collision with another vehicle or structures.

Comprehensive coverage provides coverage for your automobile in the event of non-collision events, like hail, falling objects, or if your car is stolen. The specific events covered will be written in the policy.

Lenders often require collision and comprehensive coverage for financed or leased vehicles to protect their investment.

Personal Injury Protection (PIP) and Medical Payments

Some states require PIP insurance, but it may also be added as an optional coverage in other states.

Personal injury protection pays for your medical expenses and lost wages (up to the policy's stated limit) in the event you are injured in an accident, regardless of who's at fault.

Medical payments is another optional coverage that will also pay for the medical bills (up to the policy's stated limit) of any passengers in your car who may have been injured.

Uninsured and Underinsured Motorist

Unfortunately, some drivers attempt to save money by driving without insurance altogether.

In these cases, it's important to have un- and under- insured motorist coverage. Some states require this type of insurance while others allow you to opt out of these coverages.

Uninsured motorist coverage typically helps pay for your losses that are caused by someone without liability insurance. Similarly, underinsured motorist coverage will pay for your losses when someone's liability coverage limits don't cover all the injuries they caused.

Uninsured motorist property damage is a type of car insurance that covers damage to your vehicle and other property caused by an uninsured or underinsured driver. This is also an optional coverage that may not be available in all states.

Gap Insurance

As soon as you drive a new car off the lot, it loses a significant amount of value due to depreciation. Unfortunately, if you're financing a car, your loan obligation doesn't decrease along with the actual value of the vehicle. So, if you have a total loss of a car that was worth $35K at the time of the accident and your loan was for $40K, your insurer typically only pays for the actual value of the car at the time of the accident, leaving you with a gap - the remaining $5K of the loan amount to pay.

When purchased, gap insurance helps with this problem by offering to cover the difference between what the car is worth and what you owe. In some instances, it is required or provided by your lender, but it is usually optional.

To make sure you are sufficiently covered or to get a free quote, contact us today.