Being able to understand your personal car insurance policy and coverage is important to ensure that you are investing your money where you are protected.
Personal car insurance involves a series of different types of coverage. Most of them are optional, but some are mandated by your state. Here are the different types of coverage.
Collision
Collision coverage offers protection when you are involved in an accident with another car or if you hit something. With this type of insurance, you are subject to a deductible before the insurance company takes care of their promise. The amount of deductible can be $100, $200, $500, $1000 or even more. The coverage is applicable to the people listed to drive your vehicle with your permission. Car insurance usually follows the vehicle and is not concerned as to who was driving it.
Comprehensive
This will cover for water damage, hail damage, damages inflicted by animals, certain “acts of God,” vandalism and the like. This will cover for the costs not handled by collision coverage. A deductible is also applicable in this type of insurance.
Liability
This will take over when you are the at fault driver. As a result of your negligence, the insurance company will pay for injuries and vehicle damages to the other parties involved. No deductible is required in this type of coverage. Liability coverage is usually split and you can usually see numbers in your policy. An example would be: 25/50/10. This means that the policy will pay for up a maximum of $25,000 for Bodily Injuries per person and this can pay for the medical bills. You will have a maximum of $50,000 coverage for those injuries and property damage for $10,000. If you exceed the limits, you will have to pay the rest from your own money.
UMPD
UMPD is otherwise known as Uninsured Motorist Property Damage coverage. If you were involved in a car accident and the driver who was at fault does not have any insurance, your insurance company can take care of the expenses with the use of this coverage. If for example you carry with you collision coverage for your car, you can file for damages under your collision coverage where the deductible will still be observed. Depending on the state of your residence, the deductible for UMPD is usually lower than that of collision coverage and if this is the case, your insurance company can pay you the difference of the two. For example, you have a $500 deductible for collision. You also carry with you a UMPD and you have a deductible of $100 for that. In this scenario, you have a difference of $400. The insurance company owes this amount to you just as long as they cannot prove that the other party was insured. If you do not have any collision coverage, you can still file for a claim with your UMPD and pay for the deductible that was agreed upon.
UM/UIM
UM/UIM is known as Uninsured Motorist and Underinsured Motorist. UMPD is another type of policy. UMPD is for car damages while UM/UIM will pay for your injuries as a result of an accident with an uninsured or underinsured motorist. Just like with UMPD, a deductible must be paid before the insurance can take effect.
Rental and Loss of Use
These two pretty much have the same concept.
Rental insurance will provide for coverage for renting a car while your own car cannot be used at your disposal since it was severely damaged or maybe it’s in a body shop being repaired. The amount you can get can cost from $15 per day to $50. There is a condition however. The insurance company should approve how many days you get to use a rental vehicle and weekends are not usually on their list. Make sure that your insurance will approve of your usage first before pushing though with your plans.
Lose of use can be used in there was an accident while using rented vehicle. If you have had an accident in a rented vehicle, the owner will ask you to pay for rent on the days that the car was not rented to other customers due to the accident you were involved in. The insurance company can use this policy to cover for such expenses.
PIP (Personal Injury Protection)
This will cover for injuries regardless as to who was at fault. As the name implies, the person who has the insurance will be the one covered. The medical expenses will be taken cared by the insurance company. There are some states that require PIP.
In case of an accident, your car insurance can have you covered depending on the limitations of the policy. Although you know you are protected financially, it is still best to drive safely at all times and exercise caution whenever you are behind the wheel.