It goes without saying that Auto Accidents suck. Besides the trauma of the accident, you have to deal with police, insurance and rental companies as well as potential medical expenses for yourself and/or someone else. If you are not familiar with what your coverage is, it is in your best interest to give your agent a call and check on your policy.
There are multiple different coverage categories that you have surely heard about or seen in the paperwork that you get in the mail every six months. They can be confusing so here is a breakdown from the Insurance Information Institute that lists the different coverage types and explains their functions:
1. Bodily Injury Liability
This coverage applies to injuries that 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.
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. This is the initial coverage that will get billed for your medical care, even if the other party is at fault. Your own auto insurance company will initially pay for your medical expenses and then seek reimbursement from the at fault party’s auto insurance company. Utilizing your own personal injury protection should not increase your monthly premium if you are not at fault. One of the major perks of PIP is that it pays your medical expenses in real time so trips to the hospital don’t end up in collections while you wait on a third party settlement. Check out more information about personal injury protection here.
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property in auto accidents. 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.
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.
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 outside of auto accidents. Some companies offer glass coverage with or without a deductible.
This coverage will reimburse you, a member of your family, or a designated driver for damages/medical expenses 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.
Hopefully this post has clarified some of the different ways you are covered in auto accidents or different situations. Do yourself a favor and check up on your coverages so if you have the unfortunate experience of an auto accident, you will be covered and prepared.