To some people, a car insurance policy may have too many type of coverages that will leave them confused. However, a basic car insurance coverage typically consists of six parts; bodily injury liability, property damage liability, medical payments of Personal Injury Protection (PIP), collision, comprehensive and finally the Uninsured/Underinsured motorist coverage(UM/UIM).
Bodily Injury Liability covers other people’s bodily injuries or deaths that you may have caused. Claims for such bodily injuries include medical bills, loss of income or pain and suffering. The other party might also file a lawsuit against you and this is also covered under this bodily injury liability. With this, your personal assets and savings are safe. Thus, having the same level of coverage for all your cars is a good idea. Do keep in mind that bodily injury liability does not cover you or other people in your car. Another point worth noting is that you should not set the limits too low as you will be responsible for the amount above your limits.
Property Damage Liability insures you if your car wrecks someone else’s property where it could be their car, fence or house. Like the bodily injury liability, property damage liability covers you with legal defense if a lawsuit is file against you. You should purchase enough of this insurance to insure the amount of damage your car might inflict to the others property. Any amount above your limit will also be your responsibility.
Comprehensive Coverage covers the vehicles that you drive for losses which are does not result from collision. Examples of losses that comprehensive coverage insures are thefts, fire, flood or animals. The insurance company will pay the damage less the deductible. One way to keep your premiums low is by setting a high deductible that you can pay which means that with a $500 deductible on a $2000 damage, you will need to pay the $500 while the insurance company will be paying the $1500.
Collision Coverage insures your car when it hits or is hit by another vehicle or object. Like comprehensive coverage, there will be a deductible and the higher the deductible, the lower the premium will be. This coverage might be dropped for older cars since this coverage is usually limited to the cash value of your car.
Personal Injury Protection (PIP) Coverage within specified limits will insure the medical, hospital and even funeral expenses of the insured, passengers and pedestrians struck by the insured. Those who lack a health insurance benefits from this coverage as their medical expense will be covered.
Uninsured and Underinsured Motorist Coverage (UM) insures the insured, insured members of household and the passengers for bodily or personal injuries, damages or death caused by an uninsured who is at fault or a hit-and-run driver. The policy insures your medical expenses up to the limit on your policy.