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:: HOME :: CREDIT CARDS :: LONG DISTANCE :: INTERNET SERVICE :: LOANS :: CELL PHONES :: INSURANCE · Main Page · Auto Insurance  Compare Quotes Search by State Tips and Advice· Health Insurance Compare Quotes Tips and Advice· Life Insurance Compare Quotes Tips and Advice Life Ins. Calculator· Home Insurance Compare Quotes Tips and Advice· Business Insurance Compare Quotes Tips and Advice· Other Insurance · Info & Resources :: ONLINE BANKING :: KNOWLEDGE :: MORE |
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Auto Insurance Tips and Advice Center Topic: Auto Insurance Coverage See the subtopics menu for tips and advice about auto insurance coverage. For additional information about auto insurance, see the topic list directly below.
 Basic Types Of Auto Insurance CoverageWhat are the basic types of auto insurance coverage? Automobile insurance can be broken down into three major types of coverage - liability coverage, personal property coverage and personal injury protection. In terms of auto insurance coverage, first party is the policy holder, while the the third party is the other person involved in the accident. The second party is the insurer providing the coverage (the auto insurance company). Liability Coverage (Third Party Liability) Liability coverage can be broken down into two types - property damage and medical payments (also called bodily injury). Property damage liability coverage protects you by paying for damages caused to others' vehicles when you are at fault in an accident. Medical payments (bodily injury) coverage also falls under liability coverage. This provides payment for medical treatment of bodily injuries caused to others. Property Coverage (First Party Expense) Property coverage is normally referred to as comp and collision. Comprehensive (comp) coverage helps pay for damages or replacement of your own car resulting from something other than a collision, such as theft or storm damage. Collision coverage helps to pay for repairs or the replacement of your car due to an accident (collision). Along with personal injury coverage, comp and collision coverage kicks in when the policy owner is not at fault or no one was at fault for the damages. Full coverage insurance refers to when a policy holder has both collision and comprehensive insurance. Personal Injury Coverage (First Party Expense) Personal injury protection is for damages incurred to yourself in a covered accident. It provides coverage for certain expenses deemed reasonable and necessary such as medical and hospital bills, lost wages and funeral expenses. Personal injury protection also oftentimes pays your expenses from the result of a hit-and-run accident. ^ Back to top Third Party Liability CoverageWhat are the types and limits of liability coverage? Most states (other than "no-fault" states) mandate that you have a set amount of third party liability coverage. Third party coverage refers to both bodily injury coverage and property damage coverage. These policies cover the damage caused to a third party in an accident in which the policy holder is at fault. Bodily Injury Bodily injury coverage, also referred to as medical payments, is noted on an auto insurance by a set of numbers such as 50/100 or 100/300. The first number indicates the maximum amount of coverage for one person in thousands of dollars. The second number indicates the maximum amount of coverage per accident in thousands of dollars. For example, if you have 50/100 coverage, that means the maximum amount your policy covers is $50,000 for one person's injuries and $100,000 per accident. Property Damage If you have property damage coverage, there is a third number in the series of numbers such as 50/100/25. The third number indicates the amount of policy coverage to repair of replace the third party's property in thousands of dollars. Visit the Insurance Information Institute Web site to find out how much third party coverage is required in your state. ^ Back to top Uninsured Motorist CoverageDo I need uninsured motorist insurance? Uninsured motorist coverage is an automobile policy option which pays the policy owner and/or his passengers for medical bills, pain and suffering and lost wages if the driver at fault has no insurance. This insurance is sometimes packaged with underinsured motorist coverage, which similarly covers damage caused by at-fault drivers with too little insurance. The following states mandate uninsured motorist coverage: Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, Washington DC, West Virginia and Wisconsin. In the other states, uninsured motorist coverage is optional. Some of these states also require underinsured motorist coverage. Consult the Insurance Information Institute Web site to find the laws in your state. Even if it is not mandated by your state, it is very wise to have uninsured motorist coverage to protect yourself. In addition to covering damages caused by drivers that are not insured, it will also cover damaged caused to you and your passengers in a hit-and-run accident. It may also cover if you are a pedestrian hit by an uninsured motorist. ^ Back to top Rental Car Insurance CoverageWhat is rental car coverage? When someone uses the term "rental car insurance coverage," it can mean two different things. One is auto insurance coverage offered by rental car companies on their own rental cars. If you already have third party liability coverage and comp and collision insurance on your personal auto insurance policy, then the coverage is normally extended to rental cars. Therefore, you normally do not need to accept the optional insurance (which can be very expensive) offered by a car rental company. However, check your personal policy or ask your insurance agent to be sure your policy will cover. Rental car coverage can also refer to an add-on to your own insurance policy that covers free car rentals while your vehicle is in repair. If you do not have a second car, it's a good idea to add this type of insurance onto your automobile insurance policy. It's normally very affordable and can save you a considerable amount of money by providing free car rentals in the time of need. ^ Back to top Commerical Auto Insurance CoverageDo I need commercial auto insurance if I use my car for business? If you own a business where you use vehicle(s) to conduct your business activities, you need to have a business auto insurance policy with liability coverage, comp and collision coverage, and personal injury protection (which is also referred to as medical payments coverage). You also will need underinsured/uninsured motorists coverage. Be sure, if the vehicle is owned by the business rather than you personally, that the name of the business appears on the automobile insurance policy as the "principal insured." However, if you use your personal car (owned by you individually) for both business and pleasure, you may not need to purchase a separate business auto insurance policy. Consult your insurance company or agent with any questions in this scenario. If you have employees who are driving your company cars or their own cars for your business, you will need to make sure that they are covered by your business policy. Your insurance agent will be able to discuss your options for business auto insurance coverage and find the best rates and coverage for your needs. ^ Back to top About Gap InsuranceWhat is gap insurance? Gap insurance is an auto insurance policy that covers the difference between the amount your insurance company says its worth and what you owe on your car. If your car is totalled or stolen, your insurance company will award you only the amount they believe your vehicle is worth. However, you could owe thousands of dollars more to the bank or lien holder. If you don't have gap insurance, you will be stuck paying the difference out of your pocket. Many auto dealerships will offer you a gap policy when you purchase your car. However you may be able to find gap insurance at a cheaper rate from a different auto insurance provider. Research on the Internet and call local insurance companies for price quotes on gap insurance. Remember that gap insurance is a type of coverage that you will only need for the period of time until you pay off your car (or the amount owed is less than the car's worth). ^ Back to top Insurance Coverage For Non-Policy OwnersAre my family members automatically covered by my auto insurance? When you purchase auto insurance, the policy will normally cover the damages as stipulated no matter who is driving the car at the time of accident as long as the policy owner has granted the driver permission to drive the car. However, some insurance companies will exclude other members of your household from being covered unless you include them by listing each person on your policy as a frequent driver of the vehicle. When purchasing car insurance, notify the insurer about who will be driving your car on a regular basis. If necessary, they will add the drivers to the policy to make sure that there are no questions of coverage should an accident occur. ^ Back to top Last Resort Auto Insurance CoverageWhat can I do if I can't get insurance coverage? If you find yourself unable to get car insurance coverage due to being a new driver, having a very poor driving record or driving an extremely hard-to-insure vehicle, you may need to find high-risk or last resort insurance. Insurance premiums for this type of insurance much higher than you'd regularly expect to pay, but it may be the only way for you to obtain coverage. You can participate in state-assigned risk pool set up by your state insurance commission. Auto insurance companies agree to insure a share of the drivers in the pool proportionate to how much voluntary insurance business they do within the state. The procedures for participating in an assigned risk pool vary by state. You can get information on how to join the assigned risk pool in your state by contacting your state insurance department. ConsumerAction.gov provides a list of the insurance departments by state, which includes the mailing address, telephone number, email address and Web site address, if applicable. From your state insurance department, you may also be able to obtain a list of insurance companies in your area that specializes in high-risk insurance. Though high-risk insurance is more expensive than standard insurance, it's better than the alternative of having no insurance at all. ^ Back to top
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