What Does Standard Automobile Insurance Cover?

  1. Liability

    Liability coverage protects you, up to your chosen coverage limits, against other people’s bodily injury and property damage claims resulting from an accident in which you’re determined at fault. If you’re operating another person’s vehicle with the owner’s permission, the policy covering that vehicle will be the primary policy. In the event damage claims exceed that policy’s limits, your auto liability insurance will pay excess damage claims, up to your chosen limits. More information about liability coverage can be found in the answer to the question, What is Automobile Insurance?
     
  2. Medical Payments

    Medical payments coverage protects you and other passengers in your vehicle. It pays medical and funeral expenses when you or others are injured or killed while riding in your vehicle, or while driving it. Medical payments covers reasonable expenses for things like medical and dental bills, surgical work, chiropractic help, x-rays, prosthetics, nursing assistance, and hospital stays. Medical payments coverage protects you even if you’re injured while riding as a passenger in another vehicle or while walking. This type of coverage usually is considered optional.
  3. Uninsured/Underinsured Motorist (UM/UIM)

    Uninsured Motorist (UM) covers the medical expenses you incur as a result of injury or death when involved in a hit-and-run accident or an accident in which the at-fault driver does not have automobile insurance. The at-fault driver’s liability coverage normally would pay these expenses. Underinsured Motorist (UIM) coverage kicks in when the at-fault driver has automobile insurance, but the liability limits are not high enough to pay all your claims. When this is the case, your Underinsured Motorist coverage may pay the balance of your claims, but only up to your chosen limits. Whether this coverage is mandatory or optional depends on your state’s requirements.
  4. Physical Damage

    You may have noticed that so far, none of the coverage options mentioned above pay to repair damage to your car. That’s where Collision/Comprehensive coverage comes into play. Collision pays for damage that occurs in a collision, either with another vehicle, or stationary object like a tree. Comprehensive covers damage that occurs for practically every other reason including theft, vandalism, fire, adverse weather, natural disasters, animal encounters, riots, falling objects (like branches), rioting, and flood.

There are several important issues to understand about Collision/Comprehensive coverage. First, it’s an optional purchase. Second, it involves a deductible. A deductible is an amount you pay out of pocket towards repair costs before your insurance policy kicks in. The higher your deductible, the lower your cost for this type of coverage. So choose the highest deductible you can afford. Finally, while this is optional coverage, lenders and lessors usually require it before approving vehicle loans and leases.

Transportation coverage is a separate purchase that pays a per diem rate towards a rental car (or other mode of transportation) if your car is lost or stolen.