Automobile Insurance Coverages
What Each Coverage Means
The Many Types of Auto Insurance Coverages
Auto insurance coverages come in a variety of types, and what you pay for determines how much coverage you have in the event you are involved in an auto accident. Understanding the different coverages is essential if you want to be properly insured. The following is a basic guide to help get you started:
Types of Auto Insurance Coverages
Bodily Injury Liability (BI)
Covers physical harm (including death) done by you to another person (i.e. you
caused the accident). This coverage is
meant to protect you if someone decides to file a personal injury claim against
you. In California, the minimum limits
are $15,000 per person, $30,000 per accident.
What this means is if you were to cause harm to someone else, the
maximum your insurance would pay is $15,000 for each person you harm, but no
more than $30,000 total. Keep in mind
that if someone has significant damages, they can come after you
personally. As such, it is important to
protect those assets by buying higher bodily injury limits such as $100,000 per
person/$300,000 per accident, or even higher.
Property Damage (PD)
Designed to cover damage you might inflict to someone else's property. The property may be someone else's vehicle, but could include other items, like fences, fire hydrants, houses, etc. This coverage is meant to protect you if someone decides to file a property damage claim against you.
Collision Coverage (COLL)
Protects your car if it is damaged by another vehicle or object. Usually, this coverage is not required by the state, but can be required if your vehicle has been financed through a lending agency, or is leased.
Comprehensive Coverage (COMP)
Also known as "Other than Collision" (OTC), this insures your vehicle and, to a limited extent, other vehicles you may be driving from losses resulting from circumstances other than collisions. Common circumstances include: damage from flooding, fire, vehicle theft, etc. Also covers your vehicle if it is stolen. This coverage is usually required if you are financing or leasing your car.
Medical Payments (Med Pay)
Medical payments coverage provides that if you or anyone else gets hurt arising out of the use of your car, the insurance company will pay medical expenses up to a certain dollar figure regardless of fault (even if you are at fault). This coverage is typically sold in increments of $1,000 or $5,000.
Uninsured Motorist Bodily Injury (UMBI)
If you are involved in an accident with an uninsured driver, this will cover you, your passengers, other drivers on the policy and unlicensed members of your household. It provides you with protection in the event you are injured in an accident that was not your fault and the at-fault party does not have auto insurance. It also covers you if you are involved in a hit-and-run accident (provided you obtain a police report).
Underinsured Motorist Bodily Injury (UIM)
This policy covers the same individuals as the above (UMBI) for accidents that are not their fault. This policy applies when the party who caused your accident has insurance, but the bodily injury limits are not sufficient to fully compensate you for your injuries. For example, if you have losses of $35,000 and the other side has insurance that pays only $25,000 per person, then they would not be able to fully compensate you for your losses. If you have UIM-BI coverage in excess of $25,000, let’s say $100,000, then you would be able to proceed against your own insurance carrier for the remainder of your loss, in this case $10,000.
Uninsured Motorist Property Damage (UMPD)
Covers property damage to your vehicle sustained by an uninsured driver.
A Little More Info On Uninsured Motorist Protection and Med Pay
While these
coverages are not required, they can save you a lot of money in the long
run. These coverages are typically very
cheap, and if you get a sufficient amount of coverage, it can protect you and
your loved ones from being financially responsible for any injuries you or they
sustain.
Deciding on Deductibles
Typically speaking, the higher the out-of-pocket deductible (what you pay), the less your monthly insurance payments; and the higher your monthly insurance payments, the greater the deductible. When picking insurance, be sure to factor in how much out-of-pocket costs you can afford if you are involved in an accident.
Looking At Insurance Limits
What insurance you choose determines the extent of your coverage. For instance, you might inflict damage to someone else's property that far exceeds the amount of coverage you possess. In such a scenario, you will have to pay the difference. Though it's hard to anticipate your future needs, be sure to pay for as much coverage as you can reasonably afford. Doing so can save your wallet some future heartache.
Get Insured
Most states have strict laws requiring you to carry
some form of auto insurance. If you are
not insured, you could be one accident away from having your life and finances
ruined. Having insurance means you can
drive with a greater peace of mind.
If you have been injured in an auto accident and have questions regarding your automobile insurance policy, call Lazar, Akiva & Yagoubzadeh LLP today at (800) 261-7001.
