BREAKING IT DOWN: Auto Insurance

June 4, 2014


Have you ever looked at your auto insurance policy and wondered what all the different coverages were actually for? What expenses would Bodily Injury Liability pay for? What exactly is Uninsured Motorist coverage? Do I really even need it? What’s the difference between Comprehensive and Collision coverage? Do I still need medical coverage if I have medical insurance? Will towing cover me regardless of why I need to be towed?

We know it can sometimes be a bit confusing to someone that isn’t in the insurance field, so we wanted to give you a breakdown of what’s what. (*Coverages ONLY apply if the loss was incurred as a result of an auto accident/incident.)

Bodily Injury Liability: This covers medical treatment, rehab, and funeral costs of your passengers, other drivers, their passengers, and pedestrians. Some other covered costs may include lawyer fees and pain and suffering. The California state minimum coverage requirement of $15,000 per person/$30,000 per accident usually isn’t sufficient to cover most losses. Higher limits are recommended.

Property Damage Liability: This covers the repairs or replacement of other people’s vehicles and/or property. The California state minimum limit for this coverage is $5,000. Considering the cost of new cars, a higher limit is recommended.

Uninsured/Under-insured Motorist: When you get hit by an uninsured motorist or someone that doesn’t have high enough limits to cover your losses, this coverage will kick in to pay for the medical, rehab, funeral, and pain and suffering of the passengers in your car. (If you get hit by a hit and run driver, this coverage only applies if it can be PROVEN that the driver was uninsured. If it is a hit and run and you never locate the other person, then it would NOT fall under uninsured motorist.) This will also cover the people that live in your house when they are pedestrians. It’s typically recommended that this coverage be the same as your bodily injury liability limits.

Collision: This coverage pays to repair or replace your vehicle (minus deductible*) after an accident where you collide with another vehicle or any object OTHER THAN an animal.

Comprehensive: This coverage pays to repair or replace your vehicle (minus deductible*) after an accident that is NOT a collision, such as theft, fire, water damage, or if you hit an animal.

*A deductible is the dollar amount you have to pay out of pocket to the body shop before the insurance will pay up. The higher the deductible, the lower your premium will be for this coverage and vice versa.

Medical payments: This coverage pays the co-payments and deductibles that aren’t covered by your health insurance or that of your passengers. It also may cover some rehab and funeral costs.

Rental Car: This coverage provides a rental car in the event of an accident for a certain amount of coverage per day for a certain length of time. Coverage varies from policy to policy.

Towing: This coverage provides towing fees in the event of an accident and/or possibly if you break down as a type of roadside assistance. This coverage varies by carrier and from policy to policy, so be sure to clarify your specific policy coverage with your agent.

This should help to explain what each of the coverages are for so you are able to understand them better. Each company may be a little different, so please refer to your policy wordings or speak with your agent to confirm the coverage on your particular policy. If you would like a free, no-obligation quote from one of our friendly professional insurance agents, please give us a call at 1-800-917-3577, and we will be happy to assist you. We can also answer any other coverage questions you may have and help you determine which limits are right for you.

Have a great day, and happy motoring!

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