What Do the Coverages on My Auto Policy Mean?
When you purchase a new vehicle, maybe you call your insurance agent and tell them, “I want full coverage.” But what does that actually mean? Full coverage can mean different things to different people, so we often try to stay away from that term. Instead, we might ask something like, “Do you want liability only? Or do you want physical damage coverage, too?” If you’re not sure what these terms mean, you might not know how to answer that question. Recognizing what the different coverages on your auto policy are for will help you make a more informed decision about how you want your vehicles to be insured.
Auto liability insurance is intended to cover the injuries and damages caused to the other party when you are found liable. On a personal auto policy, the limit is typically broken up into what’s called a “split limit.” You will see three different dollar amounts listed:
- Bodily injury each person – the maximum amount the policy will pay to any one person who has been injured in the accident.
- Bodily injury each occurrence – the maximum amount the policy will pay to all injured people as a result of a single accident.
- Property damage each occurrence – the maximum amount the policy will pay for damage to other vehicles or property that resulted from the accident.
Each state has a minimum auto liability limit that they require. While insuring yourself at the state minimum limit may allow you drive legally, you might ask if this limit would be enough to protect you in the even you are found liable for an auto accident.
Uninsured and Underinsured Motorists Liability
Uninsured and Underinsured Motorists Liability is intended to protect you if you’re involved in an accident where you’re not at fault. In most cases, the at-fault party’s insurance company would work with you on your damages. However, there are instances when the at-fault party either doesn’t have any auto insurance or doesn’t have high enough liability limits to cover the cost of your injury expenses. Uninsured and Underinsured Motorists liability coverage allows you to file a claim with your insurance company and collect from them as though they were providing liability coverage for the at-fault party.
Collision coverage is intended to help cover damages to your vehicle if you collide with another vehicle, an object, or if the vehicle is overturned. It is subject to a deductible. If you turn in a claim under collision insurance, the insurance company will pay for the costs that exceed your deductible amount and you would be responsible for paying the deductible amount.
Comprehensive coverage is sometimes called “other-than-collision” coverage because it is intended to cover damage to your vehicle other than that caused from a collision. You will want to read your policy to determine if there are specific things that are not covered under collision, but typically it would include coverage for losses like fire, theft, windstorm, flood, and vandalism. Comprehensive coverage is subject to a deductible, too.
Uninsured Motorists Property Damage
If you don’t carry collision coverage on your vehicle, you will want to consider Uninsured Motorists Property Damage (UMPD). It is an inexpensive coverage that would provide property damage coverage for your vehicle if the at-fault party doesn’t carry auto insurance. There may be a small deductible associated with this coverage.
Other Additional Coverages
There are some other miscellaneous coverages available that you may want to discuss with your agent, such as Loan/Lease Gap, Rental Reimbursement, and Towing & Roadside Assistance.
The next time you call your agent to add a vehicle, you’ll have a better handle on which coverages you’d like to have. Understanding what the coverages provided through your auto policy will help you to insure your vehicle the way you intended, rather than relying on someone to interpret “full coverage” the same way you do.