Basic Components of an Automotive Insurance Policy

Finding affordable insurance coverage is only half the battle. The other half is understanding what is actually covered in your policy. Here are the basic components of an insurance policy so you can figure out what’s covered and what’s not, and whether or not you need more coverage:


Liability Coverage

Simply put, this coverage pays for losses related to bodily injury, property damage, lawsuits, and defense costs. More explicitly, bodily injury costs include expenses related to death or injuries. Property damage covers your car, any other cars involved, as well as other property. Lawsuit costs and defense costs go hand in hand, but are by no means mutually exclusive. Your policy may cover lawsuit costs but not defense costs, so make sure you know what’s covered. Be aware that different insurance companies will list your liability coverage in different ways. It may be listed as a combined limit, the total dollar amount the company will cover, or a split limit, which lists the maximum amount for each type of liability.


Medical Payment Coverage

Within three years of an accident, medical payment coverage pays for all medical costs and funeral expenses that were directly caused by the accident. This will cover you even if you’re a pedestrian.  If you’re injured by a vehicle not designed for public streets, like an unlicensed all-terrain vehicle, you won’t be covered. Typically, it’s recommended to have $50,000 worth of medical payment coverage.


Uninsured or Underinsured Motorist Coverage

If you’re involved in an accident with an uninsured or underinsured driver, or if you’re injured in a hit-and-run accident, uninsured or underinsured motorist coverage will cover you. If the other driver doesn’t have enough auto insurance to cover your costs, this coverage will kick in and cover you. However, it’s important to remember that the other driver must be at fault in order for this insurance to apply.


Comprehensive Coverage

This insurance will cover any damage resulting from any collision, regardless of who is at fault. Even if the collision doesn’t involve another driver, this insurance will cover the damage to your vehicle. This also includes theft, fire, or vandalism that you may experience. It’s important to note that while this insurance covers theft of your car, it may or may not cover theft of specific items in your car, such as a purse or laptop. These items will most likely be covered under your homeowner’s insurance policy.


Understanding your insurance policy is essential to filing proper claims, and getting the money you’re entitled to. When you purchase a new policy, review everything to make sure you know what’s covered and what isn’t. Make it a point to review the policy regularly to keep the details fresh. If looking over your policy makes you wonder if you have enough coverage, talk to us today!