What Should Your Car Insurance Cover?

what does car insurance cover

Before you make a car insurance purchase, you first need to know your state’s minimum requirements. This will help you answer the question, “What should my car insurance cover?”

You can find this information via your local car insurance company, or you can go online and visit the Insurance Information Institute.

The Minimum Requirements

You will see three figures in the minimum requirements, for example 20/40/10. The first figure, 20, simply means maximum coverage for each person who’s been injured in the car accident; the second figure, 40, means maximum coverage for the entire accident; and the third figure, 10, means maximum coverage for property damage.

If the car accident you caused injured three people, each needing $20,000, then this means that the company will only pay for the first two victims since the maximum coverage for the entire accident is only $40,000. You will have to shell out money to pay for the last victim.

The Types of Coverage

Now that you know your state’s minimum requirements and what the figures mean, the next step is to know the different items your car insurance covers. This is important not only because it affects the final cost of your auto insurance, but because it will also ultimately affect you financially.

Here is a list of what a minimum requirement car insurance covers:

    1. Bodily injury liability
      If you caused the accident and the victims filed a case against you, then this will cover the expenses for medical bills as well as expenses for loss of income, pain, suffering, and even death. This also covers legal defense.
    2. Property damage liability
      This covers expenses for the damages to property that your vehicle caused.
    3. Medical payments
      This covers expenses for the injuries you and your passengers have sustained in the road accident.
    4. Collision
      This covers expenses for the damages your vehicle sustained in the accident, be it your fault or the fault of another car or object. However, this has a deductible, which simply means the amount that you have to shell out before your car insurance becomes effective. You should know that if you want to pay for a lower car insurance premium, then you have to pay for a higher or larger deductible.
    5. Comprehensive
      This simply covers any damage that your vehicle sustained from non-accident causes such as fire, natural calamities, burglary, vandalism, animals, etc. Again, this coverage also carries a deductible.
    6. Uninsured motorist protection
      In the event that you got into an accident caused by an uninsured driver, then this covers this. This also covers hit-and-run accidents.
    7. Rental car reimbursement
      Since you won’t be able to drive your car while it is being repaired, this will cover the expenses you incur for car rentals.
    8. Personal injury protection
      Available in only some states, this covers the medical as well as funeral expenses that the insured incurred.

Importance of Quality Car Insurance

Making sure car insurance covers you adequately will not only protect your wallet; it will also ensure the safety of yourself and your family!  This is especially true if you have a high net worth and you get into an accident. Plus, if you don’t have insurance you’ll have to pay for all the expenses out of pocket!

This guest post was written by Jennifer Dacey. Jennifer writes for a Lincoln Nebraska car insurance company, specializing in how-to articles regarding car insurance and car accidents.

Related posts: