What is covered by a basic auto insurance policy?
When was the last time you read your automobile insurance policy? If you’re like most people, the answer is never, or not often. So, what is covered by a Basic Auto Insurance Policy? Here’s a quick rundown of the six basic coverages included in most auto policies.
- Bodily Injury Liability
- This coverage applies to injuries that you, as the driver or policyholder, cause to someone else. It also applies to you and any family members listed on the policy when driving someone else’s car with their permission. This is very important. If you or covered members are involved in a serious accident, you may be sued for large sums of money. Think carefully about protecting assets like your home and savings before settling for the state-required minimum. That is 30/60/15 in Maryland. The first two numbers refer to bodily injury liability limits and the third number refers to the property damage liability limit. So 30/60/15 would mean in an accident each person injured would receive a maximum of up to 30,000 with only 60,000 allowed per accident (ex. 2 people needing 30,000; if the need is more such as 3 people needing 30,000 then whoever files first gets first access to the 60,000 limit and you may be sued for the rest if the accident was your fault). The last number refers to the total coverage per accident for property damage which in this case would only be $15,000.
- Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. And it may also cover funeral costs.
- Property Damage Liability
This coverage pays for damage you, or someone driving the car with your permission, may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to anything your car hits, like lamp posts, telephone poles, fences, buildings or other structures.
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers potholes damage. Collision coverage is typically sold with a deductible, such as $250 to $1,000. The higher your deductible, the lower your premium is. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you’re not at fault, your insurance company may attempt to recover from the other driver’s insurance company the amount they had to pay you. If successful, you’ll also be reimbursed for the deductible you originally had to pay.
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object. Examples are: fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer. The odds of the latter happening in Maryland are 1 in 114, with 34,112 incidents reports in 2012 according to a recent Washington Post report.
Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered, and some companies offer glass coverage without a deductible.
- Uninsured and Underinsured Motorist Coverage
This coverage reimburses you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. The underinsured motorist coverage comes into play when an at-fault driver doesn’t have enough coverage to pay for your total losses. This coverage also protects you if you are hit as a pedestrian. The PEDSAFE website reports that an estimated 69,000 pedestrians were injured in motor vehicle accidents in 2011, and 4,612 pedestrians were killed across the country.
The folks at Freedom Insurance care about your safety. If you have questions about your coverage we have the answers! Call today.
Freedom Insurance Agency