What does Auto Insurance Cover

Most auto insurance companies issue policies with six main types of coverage. In addition, there are several other options that vary by company.

Bodily injury liability (BI) – This coverage pays for injuries suffered by another party when you are considered to be at fault or negligent. This could include occupants of another vehicle, pedestrians, and occupants of your own vehicle that are not relatives. In addition to paying for injuries, most plans will also pay for your legal defense. This protects you from having your assets and future income taken away to pay a judgment.

Property damage liability (PD) – This coverage pays for damage caused to another party’s property when you are considered to be at fault or negligent. In most cases, this is the other person’s vehicle but could be anything that you collide with such as a guardrail, mailbox, building, etc. Like bodily injury liability, this protects your assets from being used to pay for the damages.

Medical payments (Med) or Personal injury protection (PIP) – This coverage pays for injuries to anyone in your vehicle at the time of an accident regardless of who is at fault in the accident. Generally, this coverage applies prior to any health insurance coverage and can be used to offset any co-pays or deductibles on a health insurance plan. In addition, this coverage will sometimes pay for loss of wages and more extensive physical therapy.

Collision (Coll) – This coverage pays for damage to your own vehicle if you collide with another object, overturn your vehicle, or have damage to your vehicle and the party at fault is unknown (hit and run). If your vehicle is financed, the lender is likely to require this coverage. Collision coverage usually includes a deductible, or amount you must pay before coverage applies. The cost of this coverage depends on the deductible you choose. Higher deductibles provide for lower premiums. In many cases, if your company pays for your damages and then another party is determined to be at fault, your deductible is returned to you.

Comprehensive (Comp) – This coverage, sometimes referred to as “other than collision”, pays for damages to your vehicle caused by an event that is not considered a collision. Examples include fire, theft, vandalism, hail damage, and most accidents involving a live animal in the road. Like collision, there is usually a deductible with comprehensive coverage. Most companies will waive this deductible to repair a windshield crack and some will waive the deductible for any glass damage.

Uninsured and underinsured motorist (UMBI) – This coverage protects you in the event that you are injured or suffer property damage in an accident where you are not at fault, and the other party has low or no coverage. Depending on tort law in your state, the company you are insured with will sue (subrogate) the responsible party.

Optional coverages – These types of coverage are offered by some companies but not by all. Rental car reimbursement, sometimes called transportation expense, will pay for a rental vehicle while your vehicle is being repaired due to a comprehensive or collision claim. Emergency roadside service or towing coverage pays for having your vehicle towed without being involved in an accident. Sometimes it will also pay for labor and/or delivery of parts or gas. Death indemnity coverage pays a particular amount if you are killed in an auto accident.