If you have ever opened your car insurance renewal and looked at all of the coverage levels, then you may have wondered what all of the amounts listed actually cover. Insurance is the one thing in life that you will want to understand because it can change your life if something were to happen while you are driving. It can mean the difference of having a claim paid by the insurance company or having to pay for all the damages out of your own pocket.
A Look into the Liability Part of a Policy
- The first line on an auto policy is called the bodily injury limits. You will see them listed as 100/300/50. Bodily injury limits pays for the injury to the other people in the event that you are found at-fault in an accident. The limit amounts mean that the policy will pay up to $100,000 per person and up to $300,000 for the entire accident. The last amount in the listing is the property damage and in this listing it will pay $50,000 for all property damaged in the accident.
- The next line on your policy is most likely titled UMBI and UIMBI. Simply stated it stands for under insured motorist bodily injury and uninsured motorist bodily injury. This coverage pays for the injuries that you may sustain from being hit by an uninsured driver or someone who has insurance that is not enough to pay for the entire accident.
- Medical coverage pays for any injuries from the accident. It also pays for funeral expenses and other medical bills related to the accident. This amount usually comes listed at $5,000 but may be raised at the request of the policy owner.
A Look into the Physical Damage Part of a Policy
- Comprehensive coverage is the most widely used part of an auto policy. This part of the policy will pay for the damage to your car in the event that it is ever stolen, hailed on, catches on fire or has a tree fall on it. It pays for all damages that are a direct result from non-accident causes. Of course, you will first have to pay your deductible.
- Next on the list of coverage limits is the collision part. This pays to fix your car if it is damage in an accident. The deductible will need to be paid before this part pays out for anything.
- Some policies may come endorsed with special equipment coverage. This part of the policy will pay for any damage to a car that has been enhanced with aftermarket equipment. After market equipment is anything that was added to the vehicle after it was delivered to the dealership and sold. Items like lift kits and special chrome pieces are considered to be special equipment parts.
- Gap coverage takes care of the difference between the loan and the actual value of the car. If the car is ever in an accident and ends up being totaled, the insurance company will only pay for the value of the car is worth on the market. The policy will not pay for any amount left over on the loan. The owner of the car will have to pay the balance out of their own pocket unless they have gap coverage on the policy. One thing to note before adding this onto a policy is to make sure that it has not been included from the dealership. Some car companies will sell this as part of a warranty package.
Other Things to Know
- Car insurance will only pay for damages to cars that are listed on the policy. If you ever change vehicles you will want to update your policy.
- Do not assume that you policy will cover anyone in the household just because they drive. All teen drivers and others must be listed on the policy in order to have coverage.
- Some auto policy discounts are automatically applied and there are some that are not applied. You should review the discount section of the policy to make sure you are getting all of the discounts that apply to your situation. If you have been in the military, then you will want to request that the military discount be applied to your policy.