Understanding Car Insurance Coverages

Car insurance is an essential requirement for all car owners. It protects against financial loss in case of an accident, theft or damage. However, it is important to know that car insurance coverages vary and choosing the right policy can be overwhelming. This article breaks down the different types of car insurance coverages to help you make an informed decision.

Liability Coverage

Liability coverage is required by law in most states. It covers damages or injuries you may cause to another person or their property while using your car. There are two types of liability coverage:

Bodily Injury Liability

This coverage pays for medical expenses, lost wages, and pain and suffering of the other party in case of an accident for which you are at fault. The minimum limit required varies by state, but it is recommended that you have enough to cover your assets in case of a lawsuit.

Property Damage Liability

This coverage pays for damages to the other party’s property as a result of an accident for which you are at fault. Again, the minimum limit required varies by state.

Collision Coverage

Collision coverage pays for damages to your car resulting from a collision with another car or object, regardless of who is at fault. It also covers hit and run accidents. However, it does not cover damages resulting from natural disasters, theft or vandalism.

The amount you will receive depends on the deductible you choose, which is the amount you pay out of pocket before your insurance kicks in. A higher deductible means lower premiums, but also higher out-of-pocket expenses in case of an accident.

Comprehensive Coverage

Comprehensive coverage covers damages or loss to your car resulting from theft, vandalism, natural disasters, falling objects, and animal collisions. Like collision coverage, it also requires a deductible.

Comprehensive coverage is not required by law, but it is recommended if you want to protect your car from non-collision damages or loss.

Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist coverage protects you in case you are involved in an accident with a driver who does not have insurance or does not have enough insurance to cover the damages. It also covers hit and run accidents.

The coverage may also include bodily injury and property damage, depending on the state requirements. The limit you choose should cover your assets in case of a lawsuit.

Medical Payments Coverage

Medical payments coverage pays for medical expenses resulting from an accident, regardless of who is at fault. It also covers medical expenses for you and your passengers if you are hit by a car while walking or biking.

The coverage limit varies by state, but it is usually optional.

Rental Reimbursement Coverage

Rental reimbursement coverage pays for the cost of renting a car while your car is being repaired or replaced after an accident. It requires a daily limit and a maximum number of days.

This coverage is optional, but it can be helpful if you need a car while yours is out of commission.

Roadside Assistance

Roadside assistance covers emergency services such as towing, jump-starting a dead battery, changing a flat tire, and providing fuel or fluid delivery. It requires a maximum limit per event and a maximum number of events per year.

This coverage is optional, but it can provide peace of mind if you have an older car or frequently drive in areas with limited services.

FAQs

What is the minimum coverage required by law?

The minimum coverage required by law varies by state. Check with your state’s DMV or insurance department to find out the requirements in your area.

What is a deductible?

A deductible is the amount you pay out of pocket before your insurance coverage kicks in. It can be a flat amount or a percentage of the total claim amount.

What is the difference between collision and comprehensive coverage?

Collision coverage pays for damages resulting from a collision with another car or object, while comprehensive coverage pays for damages resulting from non-collision events such as theft, natural disasters, and vandalism.

Do I need uninsured/underinsured motorist coverage if I have health insurance?

Uninsured/underinsured motorist coverage covers more than just medical expenses. It also covers damages to your car and other property, as well as lost wages and pain and suffering. Check with your insurance provider to see if this coverage is recommended for you.

Is roadside assistance worth it?

Roadside assistance can be worth it if you frequently drive in areas with limited services or have an older car. However, if you have a reliable car and rarely travel outside of well-serviced areas, you may not need this coverage.

Coverage	Required by law?	Recommended?
Liability	Yes	Yes
Collision	No	Yes
Comprehensive	No	Yes
Uninsured/Underinsured Motorist	No	Yes
Medical Payments	No	Optional
Rental Reimbursement	No	Optional
Roadside Assistance	No	Optional