Disclaimers

Please read our disclaimer: Many states have special mandated coverage forms and endorsements that broaden or limit the coverages described in these information pieces. We do not address these individual state mandated forms. Not all companies will sell the policies described in these information pieces. Please consult policy(s) for definitions and limitations. The terms of these information pieces do not represent contract terms. Insurance policies are subject to company underwriting practices.

Remember that this is merely an introduction to complex policy coverages. Be sure to contact your agent for detailed insurance information. 

A driver who's unlucky or careless can maim or kill other persons and severely damage or destroy property. This deadly potential is the biggest reason for auto insurance. Most states have financial responsibility laws. They require you to carry proof that you are able to pay for any damage or injury you may cause while driving. Auto insurance is the way that most people comply with these laws. Typically, drivers are required to carry liability insurance at some minimal limit which varies by state.

Bodily Injury Liability - This covers injury that you may cause to other persons. The key is that it involves you being held financially responsible for injuries to other persons because of your driving. This coverage does not apply to your injuries.

Property-Damage Liability - This handles damage that you may cause to another person’s property. Again, the coverage only responds when you are financially responsible for such damage and it has to be related to your driving.

Uninsured Motorist Coverage – This coverage typically pays for damages you suffer from an accident caused by an uninsured driver. Now, be careful with this coverage. An uninsured driver must be responsible for causing the loss. "Uninsured" usually refers to a person who has no insurance; a person who can't be located ("hit and run drivers"); a person who has insurance but their insurance company is insolvent and other situations (defined by individual state laws).

Important: Payment under this coverage is controlled by the limits mandated by a state's financial responsibility or specific uninsured motorists law that often dictates what limit or limits must be sold. In some states, you may have an option to reject the coverage. Typically, the rejection must be in writing.

Underinsured Motorist Coverage - Similar to uninsured motorist, it pays for injuries caused by a driver who is inadequately insured. Example: You are seriously injured by someone carrying a bodily injury limit of $25,000, but your injuries are nearly $50,000. Your Underinsured Motorist Coverage limit is $100,000. In this instance, your policy would pay the difference between $25,000 and $50,000.

Cars are expensive to buy and repair, providing great reasons for protecting them. If you borrowed money to buy your car, the lender was likely to make certain that you had coverages to pay for any damage to the vehicle.

Collision coverage - This covers damage to your own vehicle that happens when your vehicle runs into another object, such as other vehicles, trees, light poles, mountains, etc.

Other Than Collision coverage - This also covers damage to your own vehicle that is due to sources such as fire, theft, hitting an animal, vandalism, earthquake, flood or hail.

Unlike liability coverage, both Collision and Other Than Collision coverages are subject to deductibles, the amount of a claim that the policyowner must pay. Deductibles are meant to eliminate an insurer having to pay for very minor losses.

Personal Injury Protection or Medical Expense – This coverage typically handles medical expenses for injuries to you, your passengers or people who are "around" you. It may also cover you and your household if you, as a pedestrian or a bicyclist, are struck by an automobile.

Towing and Labor coverage - This coverage is to help pay for your costs to deal with a disabled car. It could help pay for the car to be towed to a service station or for any repair that occurs at the location of the car's breakdown. Note that this coverage is for labor rather than the costs of car parts. Available coverage is minimal (often between $25-$75).

Rental Reimbursement - This coverage reimburses your expense of renting a car as a temporary replacement. The car being replaced must be an insured car that's unavailable for use because of it being damaged, lost (stolen) or destroyed in a covered loss.

Remember the above information only touches upon some typical auto insurance issues. It's always wise to contact your agent and discuss your coverage questions and needs in detail.