Car Insurance Basics

The Five Most Important Sections of Your Car Insurance Policy

Car insurance quotes can include a lot of bells and whistles, making sure that you are covered in a wide variety of situations.  However, there are five basic sections of any car insurance policy that are absolutely critical to ensuring that you are financially protected from the most likely and the most devastating consequences of a car crash.

1. Liability Insurance

Liability insurance is the section of your car insurance that covers the damage you do when you are at fault in a collision.  It is broken down into two sections:  bodily injury and property liability.  These are the two parts of your car insurance policy that are most often mandatory to purchase.  Only five states will allow you to drive without liability coverage.

On your car insurance quote, your maximum liability coverage is usually expressed as three numbers which might look something like this:  20/40/15.  This means that bodily injury expenses will be covered up to $20,000 per person, for a maximum of $40,000 per accident, and damaged property will be covered up to a maximum of $15,000.

The expenses involved in a bad accident can mount up very quickly; liability is one area of your car insurance policy where you really do not want to skimp.

2. Collision Coverage

Liability car insurance covers damages to other people; however, your own vehicle is not included.  In order to prevent you from having to pay for the costs of your own repairs out of pocket, you need to be sure that your car insurance policy includes collision coverage.

Collision insurance is expensive enough that it might not be economically feasible if you drive a car that isn’t worth very much.  If you have a new or expensive vehicle, however, it is worth the investment.  If you have a car loan or are leasing your vehicle, collision coverage will probably be a mandatory part of your car insurance policy.

3. Medical Coverage/PIP

While bodily injury liability covers the medical bills and damages done to people in another vehicle, the medical coverage and PIP (Personal Injury Protection) section of your car insurance covers you and your passengers, no matter who is to blame in the accident.  You and your family are also covered if you are hit while not in a vehicle.

4. Comprehensive Coverage

This type of car insurance covers damage to your car that is not caused by a crash.  For example, damage from natural disasters, fire, flood, theft, and vandalism can all be recouped through comprehensive car insurance.

5. Uninsured and Underinsured Motorist Coverage

This section of your car insurance protects you if you are hit by someone who doesn’t have car insurance, or whose minimal car insurance doesn’t cover the damages, or if you are in a hit and run accident.  You will then receive the maximum coverage as provided by your own car insurance policy.