Understanding your personal auto insurance policy is not simple. As with most legal contracts, it contains a multitude of provisions and stipulations that can leave you bewildered and frustrated. This article summarizes the major coverages offered by your policy to simplify the process of purchasing personal auto insurance.
Before we begin, please allow us to add a disclaimer. This article only presents basic information about your policy. We would encourage you to review your individual policy for specific details on coverages, terms, limits, conditions, and exclusions.
As you navigate through the process of purchasing and learning about your insurance policy, don’t forget about your most valuable resource. An independent insurance agent is able to offer you more than just the coverages you need at a competitive price. These insurance professionals do a wonderful job of making the purchasing and learning process simple and easy to understand.
Personal auto liability coverage pays others for damages and injuries you become legally responsible for because of a covered auto accident. This section of the policy is comprised of both bodily injury coverage and property damage coverage. Bodily injury includes medical bills, loss of income, or pain and suffering while property damage generally involves damage to someone else’s auto, but it would also include a building or any other property damaged in an auto accident.
Most states require mandatory liability insurance on motor vehicles. Your liability coverage will apply up to the limit of liability that you have selected. Certain items such as legal fees and defense costs will be paid in addition to your limit of liability. Remember that you will be held responsible for your obligations arising from a covered auto accident that exceed your limit of liability coverage.
The limit for bodily injury coverage is generally a split limit while property damage liability is generally a single limit. When you see $100/$300 for bodily injury coverage, this means that you have up to $100,000 of coverage for each person injured in an auto accident and the maximum amount of coverage for bodily injury arising from any one auto accident is $300,000. When you see $100 for property damage coverage, this means that you have up to $100,000 of coverage for damage to property arising from an auto accident.
Medical payments coverage pays for reasonable medical expenses you and members of your immediate family sustain while in your vehicle or in someone else’s vehicle. It also applies to you and members of your immediate family if struck by a motor vehicle as a pedestrian. Finally, any person injured while occupying your covered auto is provided medical payments coverage.
This coverage is limited to medical treatment received within the first three years after the accident. A common limit of coverage for medical payments is $5,000 per person, but various limits of coverage are available. Each individual eligible for coverage can receive up to the full limit of coverage per accident regardless of the number of people injured in the accident.
Uninsured motorists coverage and underinsured motorists coverage are two separate coverages that provide you, members of your immediate family, and occupants of your vehicle with bodily injury coverage arising from a covered accident caused by a vehicle that maintains no insurance or has insufficient limits of liability to compensate for the injuries sustained. Both of these coverages compensate for bodily injury which includes medical bills, loss of income, and pain and suffering. These coverages do not help you to pay for the damage sustained to your motor vehicle or other property.
Most people maintain the same limit of liability for uninsured motorists and underinsured motorists coverage as they carry for their bodily injury coverage. Generally, the limit for both uninsured and underinsured motorists coverage is a split limit. When you see $100/$300 for uninsured motorists or underinsured motorists coverage, this means you have up to $100,000 of coverage for each person injured in an auto accident and the maximum amount of coverage arising from any one auto accident is $300,000.
This section of the policy is often referred to as the physical damage section and includes both comprehensive and collision coverages. These two coverages provide reimbursement for the lesser of the cost to repair the vehicle or the full value of the vehicle. In addition to an insured vehicle, in some circumstances these coverages will also apply to a non-owned vehicle.
Comprehensive coverage, also referred to as other than collision coverage, includes damage to your covered vehicle caused by flood, fire, theft, hail, wind, vandalism, falling objects, contact with animals, or breakage of glass. Collision coverage includes damage to your covered vehicle caused by it striking or being struck by another vehicle or object.
These coverages are not required unless your vehicle is financed or leased. You can purchase both comprehensive and collision coverage for a vehicle or only comprehensive coverage. You will need to select a deductible for each of these coverages, which represents the amount of any loss you are willing to pay out of your own pocket before the insurance policy pays the remaining amount of a covered loss. By selecting a higher deductible, you will lower your policy premium but you will also be responsible to pay more money in the event of a loss.
This optional coverage will provide you with towing and labor costs you incur each time your insured vehicle or in some circumstances a non-owned vehicle is disabled. The disablement might occur for a variety of reasons such as mechanical or electrical breakdown, dead battery, flat tire, locking the keys in your vehicle, or running out of gas. This coverage is only available for vehicles that maintain comprehensive and collision coverage. You will be required to select a limit of coverage per disablement.
If you maintain both comprehensive and collision coverage on your vehicle, you will automatically receive up to $20 per day for the cost of renting a vehicle if your vehicle is temporarily disabled from a covered comprehensive or collision loss. This coverage is payable for no more than a thirty day period. You may elect to increase the per day limit associated with this coverage to $30, $40, or $50.
Leased or financed vehicles with both comprehensive and collision coverage may elect to add auto loan or lease coverage. In the event of a total loss, your comprehensive or collision coverage will pay you for the full value of your vehicle and this coverage will pay you for the difference between the full value of your vehicle and the amount remaining owed to the bank, financing or leasing company.
This optional coverage is available for vehicles that maintain both comprehensive and collision coverages. In the event your insured vehicle is disabled more than 100 miles from home for more than a 24 hour period, you will be reimbursed for reasonable meals, lodging, and transportation expenses incurred up to $600.
This optional coverage is available for vehicles that maintain uninsured motorists coverage, but no collision coverage. In the event your vehicle is damaged by an uninsured motor vehicle, you will be reimbursed for the lesser of the cost to repair your vehicle or the full value of your vehicle. The maximum amount payable to you through this coverage is $15,000 and an automatic $250 deductible applies. This coverage is not available on Nebraska policies.
All IMT Insurance and Wadena Insurance personal auto policies automatically include identity recovery coverage. This coverage provides you with $15,000 of identity theft insurance along with services to help victims restore their credit history and identity records.
All Wadena Insurance personal auto polices automatically receive a group of additional coverages. The additional coverages include air bag replacement, new car replacement, lock replacement coverage, locked vehicle coverage, pet injury coverage, glass repairs, and guaranteed auto repairs.