Auto Policy Coverages—in Plain English
Liability—provides protection in the event of bodily injury or property damage caused by the negligence of the insured, and for which the insured is legally liable to pay damages. There are two components of liability coverage under the personal auto policy:
- Bodily Injury—coverage that comes into play when through the insured's negligence another is harmed and the insured is legally liable for damages. This applies not only to those outside the vehicle that the insured might harm, but his passengers as well (if negligence is shown).
- Property Damage—coverage for property damaged through the insured's negligence and for which he/she is legally liable for: the other person's car in an accident, a house, a telephone, etc.
Limits of Liability—the maximum amount per accident that the insurance company will pay. For example, $15,000 each person/$30,000 each accident Bodily injury Liability means that any person injured for which the insured is legally liable for injury, can only collect $15,000.00 max. So if a person is injured and has $25,000.00 in medical bills, the policy will pay only $15,000.00 and the insured picks up the balance. Likewise, if there are 4 people injured and the per accident limit is $30,000.00, that is all the policy will pay even if their bills exceed this amount. The same principle applies to the Property Damage Liability Limit: if the amount of property damage coverage is $10,000.00, that is the max the policy will pay out per accident, so keep that in mind when driving; if you only have $10,000.00 property damage coverage, maybe choose the cars you hit carefully—colliding with a Ford Festiva might not set you back, but tapping the back of a Jag or BMW may see you paying out of pocket for anything in excess of $10,000.00.
Uninsured Motorist Bodily Injury Coverage—coverage for you or the passengers of your vehicle if hit by an uninsured motorist. This can also include hit-and-run, assuming you make an immediate police report.
Uninsured Motorist Property Damage—Damage to your vehicle caused by a verifiable uninsured motorist. This means, no hit-and-run. So if your car is parked at Safeway and you come out after shopping to find the side smashed in, unless you have collision coverage under your policy, this is not covered.
Underinsured Motorist Bodily Injury—coverage to protect against the inadequacy of the at-fault other party's policy. For example, say you got rear-ended and it is determined that the othe party in the accident is at fault. But your injuries are $28,000 and his bodily injury liability coverage is $15,000 each person/$30,000 each accident. Well, if you don't have this coverage, you'll be holding the short end of a stick amounting to $13,000.
Underinsured Motorist Property Damage—coverage to protect against the inadequacy of the at-fault other party's policy. So, you have a brand spanking new Jaguar. It cost $60,000. You like it a lot. But maybe you don't have collision coverage on it, and it gets "totalled" in an accident. Fine scenario, happens a lot. Unfortunately, the guy who hit you and was deemed at fault has only the minimum insurance required by law. He has $5,000 property damage. You have $60,000 property damage to your vehicle. You pick up the $55,000 tab and maybe see him in court. Maybe.
Collision Deductible Waiver—included on policies that have both uninsured motorist coverage and collision coverage. This coverage means if you are hit by an uninsured motorist (and it must be proven—no hit and run), you do not have to pay your collision deductible (the amount you have to pay before coverage take effect—see below).
Comprehensive—covers damage to your vehicle excluding collision. So this covers: theft, vandalism, glass breakage, etc., and strangely enough, also covers running into live animals (however, running over roadkill, and damaging your car would then be covered under the collision, not comprehensive coverage. Strange, isn't it?). It is subject to your deductible. Collision—exactly what it says—a collision or accident. This coverage takes care of damage to your vehicle as the result of hitting something—a tree, another car, road kill, worse. It is subject to your deductible.
Deductible—the amount you must "pay" before the comprehensive and collision coverages under your policy will apply. So a rock gets thrown up at your windshield while you're on the freeway and you notice a little crack. Your deductible is maybe $250 and it will cost $300 to get the window fixed. In this case, your insurance company will pay you $50.00 and you pick up the rest. The same with an accident: you back into a pole and knock out a rear light and do a little body damage. The estimate comes to $500 and maybe you have a $500 deductible. You will collect nothing.
Medical Payments—optional medical coverage protects the driver and occupants of a vehicle that provides minimal medical payments regardless of fault. Note: this coverage is in excess of any other coverage in effect, so if you have a primary medical policy that covers your injuries after an accident, then the insurance company probably will not pay.
Towing—coverage under your policy where you will be reimbursed the amount stated on the policy. What happens is this: you pay a nominal fee for the coverage ($4-8 bucks a six month term) and after getting towed, you submit the bill to the insurance company for reimbursement to the limit indicated on the policy (so, if your policy provides $35 reimbursement per incident and you get towed from Los Angeles to Portland, well you better get your checkbook ready cause you're going to eat most of the cost).
Rental Car Reimbursement—reimbursable coverage to the limit stated on the policy, eligibility requirement is that your car is unavailable due to a collision. So maybe your car's in the shop for a week getting repaired as the result of an accident. You have to drive something in the meantime. But listen, give up all hope of renting a fun classic car while your domestic dependable ride's in the shop getting a cosmetic bodylift. The coverages under the policy are very modest, maybe $20.00 a day for 30 days max. Hello, Rent-A-Heap. Better to ask the body shop if they have a loaner or any deals—sometimes you can rent a car for your available limit. Note: the key to this coverage is "collision," so can't use it when you throw a rod or blow the engine. Sorry.