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What is covered by car insurance?

  • Cars Explained
  • Xavier Sabastian
  • 6 minutes

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A car insurance policy consists of several insurance policies providing various types of cover.¬†Car insurance protects you against financial risks that you might incur by harming someone or damaging your car’s property. It will also cover damage to your car, either by accident or by other hazards. Car insurance covers several different types of cases. You will be liable to pay reparation bills or medical expenses. This depends on various circumstances.¬†

You can choose the amount of coverage you will receive under each element when you buy the policy. This after accounting for the minimum amount of coverage provided by your state. 

TYPE OF COVERAGE  PURPOSE OF COVERAGE 
Collision  Covers damage to your car after a car accident, no matter who was at fault 
Comprehensive¬† Covers damage to your car that happens when you’re not driving¬†
Uninsured/underinsured motorist  Covers the costs if an accident caused by a driver with little or no car insurance 
Bodily injury liability¬† The part of your liability coverage that pays for medical bills if you’ve injured someone in an accident¬†
Personal injury protection  Covers medical expenses for you or your passengers after an accident 
Property damage liability¬† The other part of liability coverage covers the cost of property damage you’ve caused in an accident¬†

 

Does auto insurance compensate for the damage and the injuries that you cause to other drivers?

Almost every state in the U.S. needs you to have car insurance. Even those that do not require you to have coverage still force drivers responsible for an¬†accident to pay the other party’s expenses.¬†¬†Any state that allows you to have auto insurance specifies that you have bodily injury liability and property damage liability coverage. These are the two aspects of the liability insurance charged for the injury or damage to another driver’s car.¬†¬†Medical bills can be costly. The minimum amount of coverage provided for most states is between $25000 and $50000.¬†

You can’t foresee how severe a person’s accidents would be or what type of health benefits any of the expenses will have to be covered, so if you don’t think you could afford a hefty medical bill, you’ll want to spend more on the liability portion.¬†You¬†won’t¬†know how much harm your vehicle can¬†cause¬†to someone’s property until you get a repair bill, so prepare ahead for liability for property damages as well.¬†¬†To take advantage of the liability insurance policy, the injured party will file a claim with the auto insurance agent, who will negotiate with the injured party to ensure that the costs are charged.¬†

Will auto insurance compensate for your own or your passengers’ injuries?

A type of no-fault compensation, PIP can pay costs associated with medical expenses and loss of wages due to work-out and any related funeral expenses, as long as your insurance covers the accident. Medical expenses can include surgery and x-rays and hospital costs, dental offices, and nursing services. Medications, as well as prosthetic devices and hearing aids, may also be covered.¬†¬†PIP is required in so-called no-fault’ jurisdictions, where drivers are paid for accidents arising from a car accident by their car insurance provider, as opposed to by a non-fault car insurance company.¬†

Does auto insurance cover theft and loss to your car?

Comprehensive and collision insurance also goes hand-in-hand, and together they cover damage to your car. Although neither form of coverage is required by statute, you might be required to provide comprehensive, and collision insurance if you lease or rent your car. Collision insurance covers damage to your vehicle caused by a collision, no matter who was at fault. It substitutes for direct and unintended damage or failure to your insured car. This means damage to your vehicle that occurs during a collision with another vehicle, such as a crash, or injury that only affects your automobile, such as hitting a tree.  

Collision insurance is different from the property damage liability aspect. It is meant to compensate for the damage you do to other people’s vehicles. Your crash policy would not¬†cover any damage or injuries to other cars. Nor can it cover fraud or vandalism covered by comprehensive insurance.¬†¬†

The critical distinction between comprehensive insurance and auto insurance is that most collision insurance claims result from losses caused when the car is being driven, except for some hit-and-run claims. Comprehensive insurance, which is also lumped together with accident insurance, covers damage to or failure of a vehicle if it is not in operation. This means incidents outside your control, such as severe weather conditions, fire, falling objects, riots, vandalism, and animal destruction.  

Comprehensive insurance sometimes referred to as simply comp insurance protects against your car’s theft, not the items stolen from within, which would be covered by your homeowner’s or¬†renters’¬†insurance.¬†¬†

Will auto insurance compensate you if your car is worth less than you owed when totaled or stolen?

Although your car insurance coverage would be charged if your vehicle is deemed¬†complete damage after an accident or theft, your car insurance company will deduct the amount the car has depreciated from its value before deciding how much to pay you.¬†It’s called delivering you the real cash value of the vehicle.¬†¬†If you’re borrowing or renting a vehicle, you¬†may¬†owe more money to the car than it is worth. In that case, the vehicle’s real cash value will not be sufficient to keep making the payments you owe. Gap insurance covers the difference between the¬†car’s total cash value and the money you owe due to a loan or lease.¬†

Gap insurance is an endorsement that typically costs extra to add to the basic auto insurance policy. You will be expected to have it if you are renting or borrowing. The expense may already be taken into account.  

If an uninsured driver strikes you, does auto insurance protect you?

Uninsured and uninsured motorist compensation helps pay out some of the difference between what is owed to you and what the other party may or may not cover.  

Besides liability insurance, uninsured and underinsured motorists can pay for both property damage and bodily injury. You also do not need to be in the car to be qualified for coverage under this component. It may also compensate damages or injuries due to the driver of a car that is not his own. Uninsured and underinsured motorist coverage is certainly required in some jurisdictions. 

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