Auto Insurance Basics
The information provided on this site it to be used as an information tool, you should always consult your agent or go over your policy.
The following are common limitations or exclusions you might find on your policy:
Named driver: Some policies only cover household residents who are specifically named on the policy.
Excluded driver: Excludes coverage for people specifically named in an endorsement that may be attached to your policy.
Business use:Excludes coverage if you use your car for business, such as pizza or newspaper delivery.
Racing: Excludes coverage if you use your car in a racing event.
Intentional acts: Excludes coverage for losses that were intentional.
The front page of your policy – called the declarations or dec page – shows the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.
Eight types of coverage
1. Liability Coverage (Basic liability coverage meets the state’s financial responsibility requirement.)
What it pays: The following expenses, up to your policy’s dollar limits, for the people in the other car involved in an accident that you or someone covered by your policy caused:
medical and funeral costs, lost wages, and compensation for pain and suffering
car repair or replacement costs
car rental while the other driver’s car is being repaired
punitive damages awarded by a court.
2. Collision Coverage (damage to your car): If you are financing your vehicle and are making payment, your lender will require you to have collision and comprehensive coverages.
What it pays: The cost of repairing or replacing your car after an accident. You will only receive the amount of your car’s actual cash value, minus your deductible. Actual cash value (ACV) is the market value of a car like yours without damages. A salvage title may also affect the value of the vehicle and may result in less compensation.
3. Comprehensive Coverage (other than collision): If you are financing your vehicle and are making payment, your lender will require you to have collision and comprehensive coverages.
What it pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, falling objects, or an event other than a collision. Your policy won’t pay for an auto theft unless you report it to police. Payment is limited to your car’s actual cash value, minus your deductible.
4. Medical Payments Coverage:
What it pays: Your medical and funeral bills resulting from accidents, including an accident involving a pedestrian or bicyclist.
5. Personal Injury Protection Coverage (PIP): A type of auto insurance coverage mandated by statute in some jurisdictions. The statutes typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses, and similar expenses without regard to fault. Coverages, limits, and each party's responsibilities vary from state to state, as provided by law.
6. Uninsured Motorist Coverage (UM BI/PD) : Coverage for bodily injury (BI) and, in some states, property damage (PD) incurred by an insured when an accident is caused by a motorist who is not insured. This coverage allows an insured to collect from his or her insurer as if it provided liability coverage for the negligent third party
There are two types of UM BI/PD coverage:
Bodily injury UM/BI pays for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability. There is not a deductible with this type.
Property damage UM/PD pays for auto repairs, a rental car, and damage to items in your car.Who it covers: You, your family members, passengers in your car, and others driving your car with your permission.Insurance companies must offer UM/UIM coverage. If you don’t want it, you must reject it in writing.
7. Towing and Labor Coverage
What it pays: Towing charges when your car can’t be driven. Also pays labor charges, such as changing a flat tire or jump-starting your battery.
8. Rental Reimbursement Coverage
What it pays: A set daily amount for a rental car if your car is stolen or is being repaired. Your company only pays for repairs that were caused by an event – such as fire or theft – that your policy covers.