Jack Heller PRO
Owner, Insurance Browser,
OK, this will be a quick run down of coverages most commonly needed but the answer may vary some form state to state: The first coverage you need is Bodily Injury Liability. This is the amount of coverage you need to protect yourself from the claims and law suits of people you injure. The second but related coverage is the Property damage coverage for property you destroy. So it is common in the US to sell them in groups such as 100/300/100. Now what does that mean: The first number is critical. This is the per person limit of bodily injury liability. Insurers are not stupid. They know that in 75 % of all accidents, there will be one person in each vehicle (it is just the way Americans drive) So, there is a lot less likelihood of hitting that 300,000 but it would take injury to more than one person to do it. So the odds are with your insurer. Another way to buy insurance (usually about 10% more in cost) is through Combined Single Limits coverage, CSL gives you one bulk sum to pay the claim more as the accident happened rather than based on the sub limits of your policy. So split limits are the norm, but for a little more you might want combined single limit coverage.
The next coverage is usually PIP or Medical Payments. Both of these sort of compensate for usually minor events for which the party is injured and you want to take care of the injury regardless of fault. For example you give a ride to a friend who slams the door on his finger. Yes it was his fault, but it was your car and you don't want suing you over this. Your policy responds with either medical payment or Personal Injury. PIP is usually broader and often includes wages loss which Med Pay does not.
The next group of coverages are usually the most important on your policy. These are
your uninsured or under-insured motorist coverage. In about 14 % of accidents the at fault party will have no insurance. And in the next grouping of the accidents you will see coverage of the at fault party at state minimums or not much more..Now you need the protection of UM coverage. A good rule of thumb is never buy less UM than you have for Bodily Injury Liability. This is now you protecting yourself. your family and passengers in your car. It is perhaps the most little understood coverage and most important part of your policy.Lastly as respects UM/UIM you need Uninsured and Underinsured Motorist Property Damage at a level commensurate with the ACV of you car.
Next come the coverages on the physical damage to your car. The coverages are Comprehensive or also called OTC or Other than Collision. which covers many perils such as theft, fire, flood. trees falling on the vehicle etc. Collision occurs when you hit something such as a tree, a road curb, a pothole, another vehicle etc. This is where the value of your car is a consideration. You should also select a deductible that is right for you and your household budget
From here we go to many ancillary coverages including Rental Reimbursement which is usually stated as a dollar limit for thirty days ( enough time usually to get your car repaired) > The coverage is triggered by another cause of loss such as collision. The next and perhaps last coverage to consider for the general public is towing or as some companies offer road side assistance. Towing is just that towing. Whereas roadside service is usually sign and drive towing, run out of gas, lock out of car etc.
Now if you have a new car you might want replacement coverage or if leased gap coverage for loan or lease.
If you don't understand any of this gives us a call. We believe an educated consumer is better for every one.
Answered on December 17, 2013