What Does Your Car Insurance Really Cover?

Deciphering car insurance coverageCar Insurance registration form
Car ownership involves purchasing auto insurance. But what circumstances does it protect you against? What does car insurance not cover? Discover the ins and outs of car insurance to make sure you have the coverage you need.

Collision coverage
According to Barbara Marquand, contributor at Nerdwallet.com, this type of insurance protects you during a car accident with either another car or an object. It also covers you if your car flips over and suffers damage.

Comprehensive coverage
This type of insurance is usually sold together with collision coverage, as a package. Comprehensive coverage protects you from harmful incidents not related to car accidents. Per Esurance.com, it covers damages incurred from storms, falling objects, vandalism and collisions with animals like deer.

Liability coverage
In the case of an accident with another car, this type of coverage goes towards paying for the person’s injuries and any car damage incurred.

Liability coverage is usually expressed in three numbers, as Marquand states. For example, a 100/300/500 liability coverage means it will pay a maximum of $100,000 bodily injury per person, $300,000 bodily injury per accident and $50,000 property damage per accident.

Each state varies in the minimum liability insurance that they require; check your state’s requirements before purchasing car insurance to make sure you comply with this standard.

Personal injury coverage
Even if you have health insurance, it’s wise to opt for a car insurance policy that includes personal injury coverage. It covers the medical bills for you or passengers in your car in the case of an accident. If the accident proves fatal, this insurance covers funeral expenses.

Personal injury coverage can be broken down into two subcategories: medical payment coverage or personal injury protection. Some states require one or the other policy, so check your state’s requirements before purchasing this type of insurance.

Uninsured motorist coverage
This insurance protects you if you have an accident with someone who is uninsured or underinsured. It covers your medical expenses if the other driver doesn’t have insurance. If the other driver’s insurance covers only some of your medical bills, then uninsured motorist coverage will pay the difference.

According to Christina Couch, contributor for Bankrate.com, some states have more uninsured drivers than others. In Mississippi, for example, one in three drivers is not insured. If you’re on the fence about whether or not to purchase this insurance option, find out what the statistic is for your state.

Circumstances not typically covered
Although collision and comprehensive car insurance policies can shield you from a wide variety of circumstances, there are some situations that they will not cover.

As Couch notes, car insurance usually won’t cover you for items that are damaged or stolen from your car. For instance, it would cover features that came with your car when you first bought it, such as the radio or CD player. However, it would not cover any gadgets or personal items that were in your car.

Car insurance usually will not cover drivers who are living with you, unless they are specifically listed on your car insurance policy. So this insurance would not cover an out-of-the-house friend or relative who borrowed your car.

Towing and roadside maintenance are two other services that car insurance typically will not cover. However, many insurance companies offer these services as available add-ons to your overall insurance package.

Equipped with this knowledge, you can have peace of mind knowing what each type of car insurance coverage means and exactly what circumstances your policy protects you from.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

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