Your
auto
policy may include six coverages. Each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries you,
the designated driver or policyholder cause to someone else. You and family
members listed on the policy are also covered when driving someone else’s car
with their permission.
It’s very important to have enough liability
insurance, because if you are involved in a serious accident, you may be sued
for a large sum of money. Definitely consider buying more than the
state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This
coverage pays for the treatment of injuries to the driver and passengers of the
policyholder's car. At its broadest, PIP can cover medical payments, lost wages
and the cost of replacing services normally performed by someone injured in an
auto accident. It may also cover funeral costs.
3. Property Damage
Liability
This coverage pays for damage you (or someone driving the car with
your permission) may cause to someone else's property. Usually, this means
damage to someone else’s car, but it also includes damage to lamp posts,
telephone poles, fences, buildings or other structures your car hit.
4.
Collision
This coverage pays for damage to your car resulting from a
collision with another car, object or as a result of flipping over. It also
covers damage caused by potholes. Collision coverage is generally sold with a
deductible of $250 to $1,000—the higher your deductible, the lower your premium.
Even if you are at fault for the accident, your collision coverage will
reimburse you for the costs of repairing your car, minus the deductible. If
you're not at fault, your insurance company may try to recover the amount they
paid you from the other driver’s insurance company. If they are successful,
you'll also be reimbursed for the deductible.
5. Comprehensive
This
coverage reimburses you for loss due to theft or damage caused by something
other than a collision with another car or object, such as fire, falling
objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism,
riot, or contact with animals such as birds or deer.
Comprehensive
insurance is usually sold with a $100 to $300 deductible, though you may want to
opt for a higher deductible as a way of lowering your premium.
Comprehensive
insurance will also reimburse you if your windshield is cracked or
shattered. Some companies offer glass coverage with or without a deductible.
States do not require that you purchase collision or comprehensive
coverage, but if you have a car loan, your lender may insist you carry it until
your loan is paid off.
6. Uninsured and Underinsured
Motorist
CoverageThis coverage will reimburse you, a member of your family, or a
designated driver if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has
insufficient insurance to pay for your total loss. This coverage will also
protect you if you are hit as a pedestrian.
How is the price of my insurance
determined?
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