Choosing Proper Auto Insurance Coverage
When you buy auto insurance, you’re buying a bundle of individual coverage policies. Each type protects against different losses. Understanding what the different types of coverage can help you make a more informed decision. It will also help you decide what limits of coverage you’ll need.
Bodily Injury Liability Coverage
This type of coverage pays up to the coverage limits for damages due to death or injury during an auto accident in a vehicle that you’re legally responsible for. It will also pays any legal defense fees and costs. Most states legally require you to carry this type of coverage.
Property Damage Liability Coverage
This type pays up to the specified coverage limits for another party’s automobile or property that was damaged in a collision in a vehicle that you are legally responsible for. This coverage is mandatory in most states.
Medical Payments Coverage
This coverage pays up to the coverage limit for any medically required treatment from a doctor, hospital bills, or funeral expenses that stem from an auto accident in a vehicle that you’re legally responsible for, no matter who was at fault. Payments are typically limited 1-3 years after the accident. This is an optional most states.
With this coverage, you’ll be paid to the limits for pain and suffering that isn’t covered by medical, PIP, and/or disability. This coverage also pays for bodily injury to your or your passengers when the other driver doesn’t have sufficient coverage. This coverage varies from state to state.
Collision coverage will pay up to the specified limit for damages to your vehicle or a vehicle you were driving that’s been in a collision or rollover accident. If you have a vehicle loan, you’ll be required to carry this type of coverage.
Comprehensive Physical Damage Coverage
This coverage pays up to the limits for any damage to your vehicle or another vehicle you were driving that has been stolen, vandalized, flooded, or suffered from hail damage. This does not include collision or overturning damages. This coverage is required if you have a vehicle loan.
Towing and Labor
If you’re ever broken down on the side of the road, run out gas, need an oil change, or a batter replaced, this coverage is great to have. It covers the cost incurred when you render services during an emergency, but not the cost of the items. In some cases, it covers locksmith services and emergency tire changes.