2

Comments

Automobile insurance, also referred to as vehicle insurance, or simply auto insurance, is insurance purchased for cars, trucks and other vehicles. Its primary purpose is to provide levels of protection against possible losses that would be incurred as a result of traffic accidents and any potential liability of such.

Limits of coverage and liability will vary from state to state and should be discussed with you in detail by your insurance agent or broker in order for you to maintain the proper limits of coverage for your auto.

When you’re discussing policy options with your agent or broker you should ask about, and be aware of the fact that the lowest limits of liability for your state might not cover the costs of having an accident. You should make sure you carry the limits that make you comfortable should the worst happen and also stay within your budget.

When it comes to auto insurance there are many different coverage types in which to choose from. The main one that most everyone knows about is liability.

Liability Coverage

Having liability coverage is something that is required by your state. Liability coverage is what protects you should you have an accident with another driver and you are at fault.

Depending on your state there will be different levels of liability coverage that you need to cover.

When purchasing liability there are two different types:

1. Bodily Injury (BI) – Injury to a person
2. Property Damage (PD) – Damage to an object; either fixed or moving

The amount of coverage, or limits of liability, is a fixed dollar amount, meaning the maximum your insurance company is going to pay should there be a loss.

This is why you should examine the limits of liability that you carry should you get in an accident. Often times it will go over your limits and leave you stuck with the difference; especially should it be a BI instance where you end up going to court. The quickest way to go over this is should the driver of a vehicle you strike have multiple passengers with injuries.

Within liability there are two different ways to purchase:

1. Combined Single Limit
2. Split Limits

Combined single limits are those that combine your PD and BI coverage under one limit. For example, in an accident where you damage both a vehicle and injure its occupants, payments for both losses would be covered under the same limit/coverage.

Split limits are coverage where BI and PD are split. In the example above the injury to the people and the damage to the vehicle would be paid out separately under the two limit types.

With the bodily injury it is split in and of itself as maximum payments per person and a maximum payment per accident. You want to make sure that you carry enough coverage should this occur. If there are several injuries even though you have coverage to payout an amount per person it may not cover everyone under your policy if you exceed the maximum payment per accident.

Should you be able to afford it, it’s always wiser to carry more than less. If the unfortunate happens you might be left wishing you had. A loss that you’re not prepared for could destroy you financially.

Full Coverage

Now that we’ve covered liability we’ll talk a little more in depth about the other type of coverage that helps to cover you should there be an accident/incident and finish off by going quickly over some other coverage questions you should ask of your agent or broker.

Collision

Your collision coverage provides the coverage for the insured’s vehicle that is involved in an accident, after deductible. The purpose and design of this coverage is used to either repair the damaged vehicle or the cash value of the vehicle should the vehicle be deemed not repairable.

Comprehensive

Comprehensive coverage is also known as other than collision. This coverage type provides coverage, after deductible, for the insured’s vehicle for those losses not deemed as collision. Some examples of comprehensive would be the following:

• Fire
• Theft
• Weather
• Vandalism
• Animal Impacts (Though thought of as collision animal impacts are deemed as a comprehensive claim.)
• Acts of God

Final Thoughts

This is not an all inclusive list; however, these are the main types of coverage. There are some others that you should ask about when getting quotes from your agent or broker. Those include but are not limited to:

• Uninsured/Underinsured
• Loss of Use
• Loan/Lease Payoff
• Towing
• Personal Property