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Understanding Auto Insurance can be a hassle, but Homefield Insurance is here to help you become a Car Insurance expert so you can feel more confident in making your decision.
Understanding Auto Coverage Insurance
There are usually three categories that fall under Car Insurance:
- Coverages that protect your vehicle
- Coverages that protect you and your fellow travelers
- Coverages that protect you financially
Coverages That Protect Vehicle
The following car coverages are designed to get you behind the wheel again as quickly as possible:
- Collision Coverage: If you cause an accident, Collision Coverage will help to either repair or replace damaged parts of your car.
- Comprehensive Coverage: Comprehensive Coverage covers your car for anything that is not considered a “collision:” like a natural disaster or an object that falls on your car.
Getting Comprehensive and Collision Coverage is referred to as “Full Coverage” and while they may not be state-mandated coverages, they could be required by a loan or leasing company.
- Emergency Roadside Services (ERS) Coverage: Your car is damaged, now what? This is where ERS comes in. This coverage can be purchased on policies that have comprehensive and collision coverages. This coverage comes in handy when you’re stranded due to a mechanical failure or need gas delivered to you.
- Rental Coverage: This coverage reimburses you for the cost of your rental car if your insured vehicle is unavailable; You can only add this coverage to a policy that already has Comprehensive and Collision Coverage.
- Loan/Lease Gap Coverage: A car’s value decreases over time, but if you financed or leased a vehicle and completely lost your vehicle in an accident, you could end up owing more to your financing or leasing company than the actual worth of your car. Loan/Lease Gap Coverage can really save you in times like these. Your actual cash value (ACV) settlement isn’t determined based on what you owe, but on the value of the car just before the accident. Say you owe $25,000 on your car but it’s only worth $20,000. If your car is completely totaled, you could get a check of $20,000…but what about that other $5,000? Loan/Lease Gap Coverage helps to pick up the divide between your ACV and what you still owe.
Coverages that Protect You and Your Fellow Travellers
Medical expenses can be quite costly, so medical coverages serve to help pay these expenses for you and your passengers after a covered accident.
Medical Payments Coverage: Medical payments coverage can help cover accident-related medical costs (including funerals) for you, other drivers on your policy, and other passengers. It also covers any medical expenses for when you are hit by a vehicle as a pedestrian or cyclist.
Personal Injury Protection (PIP) Coverage: Regardless of whose fault it was, Personal Injury Protection can help cover medical expenses for you and your passengers. Depending on whether or not PIP is offered or required in your state, the coverage provided under PIP can vary; It can cover hospitalization, rehabilitation, other medical expenses, and sometimes other expenses.
Coverages that Protect You Financially
Liability can help pay for damaged property, medical expenses, and lost wages for other drivers and passengers if you are at fault.
- Bodily Injury (BI) and Property Damage (PD) Liability Coverage: BI and PD liability are the foundation of a car insurance policy. BI Insurance covers medical costs and lost wages for drivers or passengers that are injured. PD Insurance covers the costs to repair or replace damaged cars and other properties (e.g., a fence or building front). Liability insurance can also help cover legal fees if you are sued for other damages.
- Liability Coverage in No-Fault States: In states with no-fault tolerance, insured drivers are usually paid by their insurance company for medical expenses. Regardless, BI Liability coverage is still required in no-fault states because if injuries are bad, the driver at fault could still be sued by the injured party; Your BI Coverage can help cover those expenses. Property damage liability works the same way in no-fault states as in other states.
- Uninsured/Underinsured Motorist Liability: There are 2 types of coverage for uninsured and underinsured motorist liability: bodily injury and property damage. Both serve to financially protect you from drivers with minimal coverage, or no coverage at all. While in some states, it is required to have this type of coverage, in others it may not be a requirement.
Uninsured motorist bodily injury liability coverage can help cover medical expenses and lost wages of policyholders, authorized drivers, and passengers when the driver at fault is uninsured.
Underinsured coverage works similarly to uninsured insurance, except this coverage comes in when the at-fault driver’s liability limits aren’t sufficient to cover your expenses after the accident.