When you buy an
auto insurance policy, you are actually buying a package of individual
coverages. Each type of coverage protects you against different types of losses.
Once you understand the various coverages, you can decide which ones to include
in your personal insurance package (your policy). You can also determine the
limits of coverage you will need. The following are the common coverages found
in an auto policy.
NOTE - Your policy may not contain all of these
Injury (BI) Liability Coverage pays, up to the coverage limits, for
damages due to injury or death of others in a vehicle accident for which you or
the operator of your vehicle are legally responsible. It also pays your legal
defense costs. In most states this coverage is mandatory.
Property Damage (PD) Liability Coverage pays, up to the
coverage limits, for another individual’s vehicle or property that has been
damaged in an accident for which you or the operator of your vehicle is legally
responsible. In most states this coverage is also mandatory.
Medical Payments Coverage pays, up to the coverage limits, for
reasonable and necessary doctor, hospital and funeral expenses (not otherwise
collectable from a medical or health insurance plan) for you and your passengers
injured or killed in an accident, regardless of who is at fault. Payments are
usually limited to one to three years after the accident. This coverage is
optional in most states without no-fault insurance systems.
Uninsured/Under-insured Motorists (UM/UIM) Coverage
pays, up to the coverage limits, for pain and suffering which is not covered by
medical, disability and PIP. Covers injuries to occupants of your vehicle if
the driver of the other vehicle in an accident is legally liable but uninsured.
Restrictions may apply.
motorist coverage pays, up to the coverage limits, for bodily injury to you or
your family resulting from the negligence of someone whose liability insurance
limits are insufficient. The definition of an under-insured motorist varies from
state to state and restrictions may apply.
Collision Coverage pays, up to the coverage limits minus
a deductible, for damage to your vehicle caused by a collision or rollover. This
coverage is usually required by the lienholder if you have a vehicle
Comprehensive Physical Damage Coverage pays, up to the
coverage limits minus a deductible, for damage to your vehicle resulting from
theft, fire, vandalism, flooding, hail or other perils (but not damage by
collision or overturning). This coverage is usually required by the lienholder
if you have a vehicle loan.
Reimbursement pays up to a specified amount for rental vehicle charges
while your vehicle is being repaired for damage covered under your policy. If
you prefer not to incur the entire cost of renting a vehicle yourself and cannot
be without a vehicle while yours is being repaired, you might consider this
and Labor covers some costs incurred for services rendered at the place
of breakdown or for towing to a repair shop. It covers the delivery of gas, oil
or a battery, but not the cost of these items. If you lock the keys in the
vehicle or need a tire changed, this may also be covered. These services are
often included in auto club memberships, which can result in unnecessary