Auto Insurance Policies

There are many types of coverage you can carry on your automobile insurance policy.  The most common types are Liability, Medical Payments, Uninsured/Underinsured Motorist, Comprehensive/Collision, and Rental Reimbursement. Keep in mind, the more coverage you carry on your policy, the higher your premium will be, but it is nice to know the coverage is there when you need it. This article will explain the various coverage available, what they pay for, and what is typically excluded. It is important to be knowledgeable of this information before your purchase your insurance policy. The time of an accident is not the time you want to find out what is and what is not covered by your policy.

Liability Coverage

Liability coverage is the coverage you are required to carry by your state.  Each state has its own requirements as far as the minimum amount of coverage you are allowed to carry. To find out what the requirements are for your state, refer to the following website,  Liability coverage pays for property damage or bodily injuries you are liable for because of an accident.   When you look at an insurance policy, the coverage will be broken down in the following fashion: 15/30/5.  In this case, there would be $15,000 per person for bodily injury with a maximum of $30,000 per incident, and $5,000 maximum for property damage. 

When you purchase liability insurance, it is often better to purchase more than just the state minimum. For example, in a state such as California, which only requires limits of 15/30/5, $5,000 in property damage coverage does not go very far if you cause an accident and total out the other car, or even worse, strike multiple vehicles.  Anything above the $5,000 you will be held personally liable for.  Same goes with injuries, a limit of $15,000 per person does not go far if you fatally or seriously injure somebody.  Be sure to purchase enough liability coverage to protect your family and your assets.

Medical Payments Coverage

Medical Payments Coverage is coverage in the case you or your passengers are injured in an accident.  It is typically purchased in limits of either $1,000 or $5,000 and is usually available to you right away.  If you need to go to the hospital or doctor after the accident, this coverage will pay the bill as it becomes due.  Some people opt not to purchase this coverage if they already have health insurance, as they are paying double coverage.

Uninsured/Underinsured Motorist Coverage

Uninsured Motorist coverage pays in the event an uninsured motorist causes an accident and damages your vehicle or injures you. This coverage often applies to a hit and run type accidents, however, there are some restrictions.  For this coverage to pay for a bodily injury, there usually has to be a direct impact to your vehicle. For the coverage to pay for vehicle damages, you usually have to either be able to identify the driver/owner of the other vehicle, or to be able to identify the vehicle by the license plate number. There is usually a deductible on the payment for your vehicle damages, typically $100.  Sometimes there are cases where you are in an accident, and the other party does have insurance, but the liability limits are not high enough to cover your injuries of vehicle damages.  In this case, you can use your Underinsured Motorist coverage to pay for the difference.

Comprehensive/Collision Coverage

Comprehensive coverage pays for damages to your vehicle caused by an event other than a collision.  Things that fall under this category are theft, vandalism, flood/water damage, falling objects, and accidents involving animals.  Collision coverage pays for damages to your vehicle caused by a collision, regardless of fault.  For both, you usually chose a deductible, which usually ranges from $100 to $1000, although the standard is either $500 or $1000.  You are responsible to pay the deductible, and then your insurance carrier will cover the rest. 

If you had to pay to have your vehicle towed from the scene of an accident, the amount you paid is usually applied towards your deductible.  If your vehicle is towed to a tow yard, the tow and the storage is usually paid by the insurance company, given you provide them immediate notice of the accident and release the vehicle to the insurance company in a timely fashion. There are some exclusions under this coverage. For example, personal items stolen from the vehicle or damaged in an accident are usually not covered.  Also, any upgrades made to your vehicle, are also usually not covered, unless you have specifically insured them by a special endorsement.

Rental Reimbursement Coverage

Rental Reimbursement Coverage pays for a rental car, should your vehicle be disabled due to an accident or your vehicle is in the shop being repaired for damages from a collision. It does not cover a rental for the simple mechanical breakdown of your vehicle. There is usually a maximum amount covered per day, typically $20 or $30 per day, and there is usually a maximum, typically $600 or $900.  The insurance company will pay for the cost of the rental up to the daily limit and policy maximum; you will be responsible for anything above the daily limit. The insurance company typically does not cover the rental car insurance, as often times your liability and collision coverage will transfer over to the rental car. The insurance company will not pay for gas either.  Just like it was your own car, you are responsible for your own gas.


The only coverage you are required to carry is Liability coverage, this will take care of any liabilities you have for causing an accident. There is more coverage you can carry that applies to injuries in your vehicle or your vehicle’s damages.  Be sure to choose your coverage carefully; be sure to carry enough coverage to protect your family and to minimize your out of pocket expenses at the time of an accident.