What Does Car Insurance Cover?

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What does a basic car insurance policy cover?
When and how does my car insurance coverage work?
How much does car insurance cover?
What car insurance policy is best for me?
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What does a basic car insurance policy cover?

I just got car, and now I’m shopping around for an insurance policy. The thing is, I have no idea what car insurance does or why I need it. What’s covered by a basic car insurance policy?

A basic car insurance policy is designed to protect against things that happen to your car and the people inside it, as well as other cars (and the people inside them) if you get into an accident. Car insurance also covers other types of property you may cause damage to with your vehicle. Let’s discuss each of the main components for a better understanding of the coverage.

  • Liability: This covers damage done to and by your vehicle. Liability coverage applies to both property damage and bodily injury. Property damage coverage will take care of expenses for damage done to vehicles or other property struck by your car, including legal fees if you are sued. Bodily injury coverage pays medical and legal fees for third parties injured in a wreck.
  • Medical payments: This coverage is designed to protect you and the other occupants of your car. If the driver injures themself or any occupants who are riding with them at the time of an accident, medical payments coverage will take care of the fees.

That’s essentially what’s included in the most basic of auto insurance policies. However, you may purchase extra coverages to add to your policy to make it more complete.

These are the standard options:

  • Collision: This type of coverage will take care of damage done to your car in the event of a collision with another car or piece of property such as a telephone pole or tree. Coverage applies in the event that the collision is your fault.
  • Comprehensive: This coverage option will take care of damage to your car caused by things other than a collision, or elements considered to be beyond your control. This insurance aspect covers damage done by natural disasters such as windstorms, hail, earthquakes, floods, and fires. It also covers theft or vandalism of your vehicle. Take note, however, that there’s one type of collision covered under comprehensive car insurance—collision with a deer.
  • Uninsured/underinsured motorist: This coverage will take care of fees resulting from a covered driver of your vehicle (e.g., you or a family member) getting into an accident with another driver who doesn’t have sufficient coverage to reimburse you fully. This coverage also reimburses victims of hit-and-runs, and pedestrians who are struck by a driver without sufficient insurance.

When and how does my car insurance coverage work?

Car insurance coverage will kick in on the effective date of your policy, and will reimburse you in the event of a covered scenario, such as an accident. Your policy will reimburse you for covered events up to their specified limits in each category.

Here’s a basic list of when car insurance would cover you:

  • You’re involved in a vehicle collision that results in injury to the other driver or their passengers.
  • You’re involved in a vehicle collision that results in injury to your or your passengers.
  • You cause an accident that results in property damage to a third party.
  • You’re at fault for a collision with another car or piece of property and your vehicle is damaged.
  • You’re involved in a collision with a deer.
  • Your car is stolen or vandalized.
  • Your car is damaged by natural forces such as storms or fire.
  • You or your family member gets injured by an uninsured/underinsured driver.
  • Your car is damaged by uninsured/underinsured driver.
  • You are out walking and get struck by an uninsured/underinsured driver.
  • Your car is struck by a hit-and-run driver.

For all of these scenarios to be covered, the policyholder would have to have purchased collision, comprehensive, and uninsured/underinsured motorist coverages.

How much does car insurance cover?

That depends entirely on your specific policy. Each of your coverage aspects comes with its own limit. These limits may be as low as each state’s legal minimums for insurance coverage, or you can purchase additional coverage up into the millions for each category. Keep in mind that each additional aspect of coverage you tack onto a basic policy will come with its own coverage limit, and probably its own deductible.

In the event of an accident or other mishap, your insurance will reimburse you for fees that reach up to your policy’s limit in that category. If you have $10,000 in liability coverage, but cause $11,000 in property damage or bodily injury, you’ll be responsible for paying the remaining $1,000. How much coverage you purchase is up to you. It’s important to consider your specific needs when shopping for your policy.

What car insurance policy is best for me?

The only way to figure that out is to work with an experienced independent insurance agent. They’ll be the most capable of taking your needs into consideration and selecting the best coverage options, and limits, for you. They’ll also be able to shop around for the right coverage for you at the best price.

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TrustedChoice.com Article | Reviewed by Paul Martin

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