car-coverageWhen it comes to car insurance coverages, the types that are available and exactly what they cover and whether or not you need them, there always seems to be a great deal of confusion. As a consumer and purchaser of auto insurance and insurance related products, you will find it helpful if you gain a greater understanding of what these types of coverage are, and how they may impact you. In this brief primer we will discuss the primary kinds of car insurance coverages, and details you need to know.

Collision Coverage

Exactly like it sounds, car collision coverage is the component of your policy that will typically pay you when your car is damaged as the result of a motor vehicle collision with another car or light truck, or with a structure or object. What normally happens is that you will obtain an estimate of the damages from an approved body repair facility or from your insurance firm itself. After that, the repairs will be made at the repair facility of your choice, and then your insurance company will either send you a check for the repairs or pay the repair shop directly, less your collision deductible, which is the amount you are personally responsible for.

So, for example, if the repairs total $5,000, and your deductible is $500, the insurer will pay $4,500 either to you, the insured, or directly to the California collision repair shop. You then pay the $500 deductible and take your newly repaired vehicle home, good as new!

Do I need Collision Insurance?

You may not, and it pays to think carefully about whether you need to be paying the high premiums collision coverage often carries. After all, what if the car or truck you drive is old, worn out, and nearly worthless. You probably don’t need to carry collision. However, if you couldn’t easily afford to replace your vehicle, especially if it’s a newer model, you should have collision coverage. And, if your vehicle is leased or financed, the leasing company or lender will most likely require you to have collision.

Liability Coverage

One of the most important car insurance coverages is liability, which pays in the event that you cause damage to others or their property when you or someone else is behind the wheel or your covered automobile. Every state requires this, so you should fully understand it. Liability coverage falls into three main types:

  • Bodily Injury coverage, per individual person;
  • Bodily Injury coverage, per each accident occurrence;
  • Property Damage coverage;

When you want to know how much liability coverage a particular policy carries, you will normally see three numbers, like this: 50/100/50. What this means is that the liability coverage limits are $50,000 maximum for bodily injury per person, $100,000 maximum per each accident occurrence, and $50,000 maximum for property damage. Another common coverage limit is 100/300/100, but check with your agent or carrier to determine what the requirements are in you state.

In California the minimum limits are 15/30/5 but you may want to carefully consider paying a little more for higher coverage limits, depending on how much personal property and assets you have and care to put at risk.

Medical Coverage

Another of the car insurance coverages you need to know about is medical, which will pay for medical related costs and expenses in the event of personal injuries. This coverage is not mandatory, but you will want to seriously consider adding it to your policy. After all, this valuable coverage will pay for injury to you or you passengers no matter who is determined to be at fault, in vehicular collisions. This coverage will even pay if you, as a pedestrian, are hit by a motor vehicle and need medical care or treatment.

There are many types of treatment and care covered by this policy component, including hospital and doctor care, surgeries, x-rays and tests, ambulance fees, skilled nursing and long term care, artificial limbs, and final expenses.

Comprehensive Coverage

Sometimes things happen that are not the result of a motor vehicle accident or collision. These may include weather or storm related damage, theft and destruction due to vandalism, things that fall on your vehicle, animal related damage, and stone-chipped windshields and broken glass.

These things and many others are typically covered by comprehensive, another type of the car insurance coverages you need to be familiar with. Similar to collision, this kind of coverage is subject to a deductible which you choose at the time you purchase your policy. The higher your deductible, the less this type of coverage will cost you.

Uninsured Motorist or Underinsured Motorist Coverage

Sometimes, people drive with no insurance. Other times, they may get behind the wheel without the proper amount of coverage. Uninsured/Underinsured motorist coverage makes sure that if you’re involved in an accident or collision with a person like this, you and the other occupants of your vehicle are still covered, if the other motorist is found to be at fault.

As with many other kinds of auto insurance coverages, how much of this coverage to carry depends a lot on your personal finances. If you have a lot of money and assets to protect, you may want to consider increasing the amount of uninsured/underinsured motorist coverage in your policy, for increased peace of mind. On the other hand, if you have few assets, or your tolerance for risk is high, you could even forego this coverage altogether.

Personal Injury Protection (PIP)

Simply stated, this is one of the most overlooked car insurance coverages. PIP will pay for such expenses as child care, funeral expenses, and loss of income in the event you’re injured in an accident and unable to work or provide for any or all of these services. Consider carefully if you might need this valuable coverage when getting a car insurance quote.

Now that you have a better understanding of the different kinds of car insurance coverages available, you will be a better informed consumer.

driving-car-coverageI attended an insurance briefing by my insurance provider recently and learned quite a number of things about what exactly comprises comprehensive coverage, as far as insurance is concerned. The discussion about comprehensive insurance cover drew a lot interest from the participants because there seemed to a lack of consensus on the use of the term comprehensive. Some felt that insurance companies use the term comprehensive coverage as a marketing ploy to make potential insurance providers to imagine a possibility of eliminating all the risks they hope to insure against.

The insurance executive who was leading the plenary had a lot of hard time explaining what is comprehensive coverage is all about. I managed to jot down some notes which I revisit in this article. One thing our insurance guy was specific about the term comprehensive cover refers to the most detailed auto cover that is available in the market. He was emphatic that the term comprehensive cover does not denote a special ability to mitigate your auto insurance risk, subject to conditions set out in the policy. In other words, the comprehensive cover can only cover the occurrence of stated risks up to a given maximum extent.

This, according to the insurance executive, works as follows: the minimum auto insurance cover, accepted by law for an automobile to be on the road, is the third party auto insurance cover. In this case the registered automobile owner displaces the risk that may arise from the use of his/ her automobile. However, being only the barest form of auto insurance, the third party does not provide protection to the owner and his/ her interests. In other words the owner is left, alone, to assume his risk exposure. Anyone else who suffers loss, save the owner, is however eligible for compensation.

The third party auto insurance cover moves a notch high when it becomes: third party fire and theft. This, according to the insurance executive, covers the third party (described above) plus the risk of loss to the owner that arises from the automobile being stolen or destroyed by fire. In other words the owners’ interests are included to include two other specific risks: fire and theft. This is therefore, as the explanation was put to us: more comprehensive auto insurance cover than the third party. However, all other risks are not covered, and the name adopted for this auto insurance cover clearly indicates this: ‘Third party auto insurance, Fire and Theft. Period.

The third form of auto insurance is the comprehensive insurance. So, what is comprehensive auto insurance coverage? Our insurance executive managed to impress us on this. He explained that comprehensive auto insurance cover, unlike the other two auto insurance covers, integrates losses suffered by the owner in respect to his/ her automobile. This, therefore, implies that the owner will get compensated for loss or damage to his or her vehicle. Note that these losses are not limited to fire and theft only. Rather the comprehensive auto insurance will reimburse for owner’s interests as far as his/ her automobile is concerned, up to the extent of coverage.