Until the time we left our parents’ auto insurance coverage and had to purchase our own policy, many of us didn’t know or even care about the different insurance coverage types. Some are required by law, some required by lenders, and some are those niche needs like antique and collectable car policies.
Regardless of your situation as a newly independent policy shopper or first-time car buyer borrowing money for your dream car, you need to know your obligation. You should learn about the customary types of car insurance coverage. You will need to understand the available coverage types and how they will protect you, your passengers, and your car should you be involved in an accident.
The state you reside in determines by law which coverages you must have and which you can opt for. Knowing what your state laws are will help you determine coverage to fit your circumstance.
These coverage types are the most customary:
- auto liability coverage
- comprehensive coverage
- collision coverage
- uninsured and underinsured motorist coverage
- medical payments coverage
- personal injury protection coverage
Auto Liability Coverage
You must carry the minimum auto liability coverage in most states. For instance,
In Ohio these are the amounts:
“When you buy Ohio auto insurance coverage, you’ll need at least the required state minimum amount: state minimums for Ohio are $25,000/$50,000/$25,000. $25,000 for bodily injury for each person involved, with a total maximum of $50,000 coverage per accident Liability coverage has two parts: Property Damage (PD) and Bodily Injury (BI)
In Indiana the minimum coverage amounts you must purchase are Bodily Injury (BI): up to $25,000 for the injuries or death of one person, to a total of $50,000 for two or more persons, in a given accident.
And Kentucky requires a minimum of “25/50/10” of bodily injury and property damage coverage.
- Property Damage (PD) liability covers for damage you cause to another person’s property with your vehicle.
- Bodily Injury (BI) liabilitycovers for injuries you cause to others if you hurt them in accident.
Comprehensive is usually optional coverage — but your lender (bank or credit union) may require comprehensive coverage if you borrowed to purchase your vehicle.
Comprehensive helps you cover if your car is stolen or vandalized, damaged by hail, scratched by tree branches, or catches fire, etc. This type of coverage pays to have your damaged vehicle repaired or replaced depending on the extent of the harm.
A deductible generally applies with most Comprehensive policies and determines your out of pocket expense portion of the claim. Typically, the higher the deductible (what you are comfortable paying as your share before the insurance portion kicks in) the lower your premium costs. Conversely, a lower deductible amount equals a higher premium.
When you are in an accident with another car or collide with fixed objects like buildings, power poles, guardrails, or landscaping, etc., collision coverage will help you pay for the damage to your car.
Again, collision coverage may be optional. But it may be required by your bank or other financial lender.
Uninsured and Underinsured Motorist Coverage
This coverage is required in some states but not in others. When a driver crashes in to you and they don’t have insurance, your uninsured motorist coverage comes in to play. This coverage helps you pay for medical bills, and depending on your state, your car repair bills. If the driver who hits you has insurance, but they are underinsured (they have limits on their policy that aren’t substantial enough to pay your medical bills) your underinsured coverage can help.
Medical Payments (Med Pay) Coverage
This coverage is required in some states but not in others. When an accident occurs and injuries result, medical payment coverage helps pay for the associated costs. Costs for ambulance rides, emergency room and hospital visits add up quickly. You and the passengers in your insured vehicle are covered.
Personal Injury Protection (PIP)
This coverage is required in some states but not in others. This PIP coverage helps pay for expenses after the accident. It can cover costs caused by the accident among things like lost wages and babysitting if you miss work while visiting the doctor or going to physical therapy.
Many other Coverage Options are Available
Depending on your need, many other optional types of coverage are available to protect you: rental expense, new car replacement, towing costs, sound system coverage, and classic car insurance. For your auto insurance policy, call our office:
J.M. Insurance & Financial
Our agency’s mission is to recommend coverage and policies meeting each individual need.