What Does Auto Insurance Cover?

Auto insurance can cover a wide range of situations with many optional coverages for particular circumstances. The typical driver will have the following liability coverages simply because they are mandatory in most states. Considering the destructive potential of car accidents, it’s easy to see why liability insurance is mandatory:

• Property Damage Liability Coverage – If you damage someone’s car or property (i.e., a fence), you are considered liable for those damages. Liability coverage will pay out an amount up to what is stipulated in the policy to cover property repairs for others.
• Bodily Injury Liability Coverage– If you injure someone, you are considered liable for their injuries. Liability coverage will pay out an amount up to what is stipulated in the policy to cover medical expenses or property repairs for others.

Mandatory requirements mainly only cover injuries and property damages sustained by others, not the policyholder. The Law says that all drivers are liable for the damages they cause to anyone and anything around them. Driving is a privilege that makes the driver accountable.

When it comes to a policyholder’s health and property, the Law is more lenient. The following coverages help protect the policyholder’s health and property, coverages that may not be mandatory in your state.

• Collision Insurance Coverage – If you’re driving and your car is in an accident, collision insurance will cover the repairs to your vehicle, regardless of who is at fault. Back up into a dumpster, this will help you fix your bumper.
• Comprehensive Car Insurance Coverage – If your car is damaged from non-accident-related causes like a tree falls on it, hail damages it, rioters vandalize it, or someone steals it, comprehensive coverage will pay for repairs.
• Medical Payments (MedPay) Coverage — Auto MedPay covers medical and funeral expenses following a car accident and can protect the driver, family, and additional drivers.

Advice Point: Because it is minimally required and the premiums may be less, it is tempting to only insure for property and bodily injury liability coverage and not protect yourself with comprehensive and collision coverage. However, seriously consider your circumstance if you were in an accident and your car was totaled. Would you have enough financial savings to cover your own injuries and damages and purchase a new car? Do you have primary medical insurance? Will you have to stop working? Knowing the answers to these few questions will go a long way in bringing perspective to how vital car insurance coverage is.