Have you ever received your renewal for your auto insurance and wondered what the coverages and numbers mean? You pay for insurance each month or year so shouldn’t you know what you’re paying for?
Required Coverages
Bodily Injury Liability
This is typically going to be the first set of coverages you’ll see on a policy. This is what gives you coverage in case you hit and injury someone else. In the example below, the Bodily Injury Liability limits are $100,000/$300,000. So what does that mean? That gives you $100,000 for bodily injury per person, and $300,000 bodily injury per accident. There are other coverage options, but these numbers are a mid-range amount and the amount that we at SIG suggest is your minimum. In other words, we don’t want any of our customers to have lower limits than this. You can refer to my post regarding state minimum liability limits here.
Property Damage Liability
Property damage liability is what gives you coverage if you hit someone else and do damage to their car or any other property damage, i.e. a fence, telephone pole, building, etc. In the above example, the property damage amount is $100,000. This is going to give you $100,000 to coverage all property damage in an accident. So if you hit two other vehicles, you have up to $100,000 to cover you for repairs to the other vehicles.
Uninsured Motorist and UM Property Damage
The next set of coverages you’re going to see on your insurance policy is probably uninsured/underinsured motorist and is most likely the same amounts as your liability coverage. This covers your vehicle and medical expenses for instances such as a hit and run or if you’re hit by someone who doesn’t have any insurance or doesn’t have enough to repair your vehicle.
Medical Payments
Medical payments is the coverage for you (or anyone in your car) that will cover your medical expenses if you’re at fault and anyone in your car is injured.
Optional Coverages
Any coverages you see passed this are typically optional coverages, although there are times when some of these can be required.
Comprehensive or Other than Collison
Comprehensive or other than collision coverage is not a coverage that is required by law. However, if you have a loan on your vehicles and you make monthly payments on your car, this will be required by your lender. If you do not have a loan on your car, this is an optional coverage. This coverage is for theft of your car, fire, hail, glass breakage, or hitting an animal. In the example below, you see $500 w/ Full Glass. What this means is you have a $500 deductible for any of the above stated losses, except glass. So if your car gets stolen and is not recovered and insured deems it to be worth $10,000, you are responsible for $500 and insurance will pay $9,500. Full glass is offer by some companies but not all and is not on every policy. In this instance, if you have a glass only loss (no other damage other than glass), you do not have to pay your deductible.
Collison
Collison is not a coverage that is required by law, but again, if you have a loan on your vehicles and you make monthly payments on your car, this will be required by your lender. If you do not have a loan on your car, this is an optional coverage. This coverage is for your vehicle if you hit someone else, a fence, telephone pole, building, etc. In the example above, if you incur a $10,000 loss to your vehicle (either totaled or just damage), you are responsible for $500 and insurance will pay $9,500.
Roadside Assistance or Towing and Labor
Roadside assistance or towing and labor is an optional coverage. This is not required by law or by a lender. Because this coverage can vary from company to company, I suggest you reach out to your agent for an explanation on this coverage. I’ve seen some that only cover towing up to a specific amount, some up to a specific number of miles away from where it’s being towed. Others include cost of labor at the site of disablement, and other actually include coverage for locksmith services, helping changing a flat, and delivery of gas. It’s best to refer back to your agent on this coverage to see exactly what it covers.
Loss of Use
Loss of use is an optional coverage and is not required by law or by a lender but can sometimes be a great coverage to have. If you are involved in a covered accident and have this coverage on your policy, your insurance will provide you with a rental car while your vehicle is being repair, for up to thirty days. In the above example, this policy will pay up to $50 per day for up to 30 days. The coverage amount for this can range anywhere from $25-$100 per day. Our agents at SIG have begun quoting and writing $40-$50 per day due to the cost of rental cars.
It’s always good to know what you’re paying for and exactly what each coverage means so you know what you have if and when you ever have to use your insurance. If you ever have any questions regarding your coverage or would like to quote changing your coverage (or actually change it) you can reach out to your agent at any time to do so.
