Insurance Insight: Auto Insurance – Deductibles And Coverages

Coverage is important in many areas of life. We want our children to be covered when playing sports. We want our skin to be covered from the sun. We want our homes to be covered from natural disasters. So, we should also want our automobiles to be properly covered when an accident occurs. It is important to understand the many types of deductible and coverage options available.

“Deductible” and “coverages” are terms that insurance companies have used forever. But many of us still don’t know exactly what they mean or understand how they affect our auto insurance. So without further ado, here’s a primer.

What’s a Deductible? How Should I Choose Mine?

Put simply, a deductible is the amount that you agree to pay up-front when you make an insurance claim, while the insurance company pays the rest up to your coverage limit. When choosing your deductible, think about how much you’re willing to pay out-of-pocket if you need to make a claim. And balance that against the fact that higher deductibles typically mean lower premiums. It really comes down to what makes you the most comfortable.

What are Common Coverages?

Auto Liability coverage pays for the damage if you’re legally responsible for injuring someone, or for damaging another vehicle (or other property) in an auto accident. Liability coverage also pays legal defense and court costs. State laws usually dictate the minimum amounts of insurance required, but higher amounts are available.

Personal Injury Protection (PIP) coverage pays your (or another covered driver’s) reasonable and necessary medical expenses for treatment caused by an auto accident. It may also pay for rehabilitation, lost earnings, replacement of services (e.g., child care if a parent is disabled), and funeral expenses.

Medical Payments coverage is available in many states. It pays for necessary medical and funeral expenses for those covered when the expenses are caused by an auto accident.

Collision coverage helps pay for loss or damage from an accident to a covered vehicle caused by collision with another vehicle, collision with an object, or a vehicle rollover. A deductible is required.

Comprehensive coverage helps pay for loss of or damage to an insured, covered vehicle that is not caused by a collision or vehicle rollover. Examples of this type of damage or loss include fire, wind, hail, flood, vandalism, theft, and hitting an animal.

Uninsured Motorist coverage pays for damages if you or another covered person is injured in an auto accident caused by a driver who does not have Liability Insurance. In some states, it may also pay for property damage. This coverage varies by state and depends upon policy provisions.

Underinsured Motorist coverage pays for damages if you or another covered person injured in an auto accident caused by another driver who is considered to be underinsured as defined by the policy. This coverage varies by state and depends upon policy provisions.

Rental Reimbursement coverage pays for rental expenses if your car is disabled due to a covered loss. Daily allowances or limits vary by state or policy provisions.

Emergency Road Service coverage pays for having your auto towed due to a breakdown. Towing limits vary by state or policy provisions.

This information is only a general description of available coverages and isn’t a statement of contract. All coverages are subject to all policy provisions and applicable endorsements. Talk to your insurance agent to see what coverage you have and if it fits your need.