Full coverage auto insurance provides you with comprehensive protection from accidents in case they happen, typically including state minimum requirements as well as comprehensive and collision coverages.
Liability, comprehensive, and collision policies may offer additional coverage options such as personal injury protection (PIP), medical payments coverage or uninsured motorist protection.
Bodily Injury Liability
Bodily Injury Liability coverage will reimburse any costs related to an injury caused by you up to your policy limit, such as medical bills, lost income compensation and funeral costs for an injured third-party who is sueing you over what they consider your negligence in an accident. It also provides protection in case legal fees arise in response to such allegations against you as the source.
Financial experts often suggest increasing this minimum coverage beyond state mandated requirements, especially in car loan agreements or lease contracts. Many states mandate drivers carry this coverage.
PIP (Personal Injury Protection) covers medical expenses for you and your passengers, while collision and comprehensive coverage provide for any damage to your car. In terms of bodily injury and property damage limit amounts, three numbers such as 100/300/100 can help provide insight; where each number represents maximum coverage per person involved in an accident caused by you while the last figure represents total limits applied across both bodily injury and property damage claims.
Property Damage Liability
Property damage liability coverage pays for damages you cause to others’ cars and property in an accident that you are at fault for, with an average minimum limit of $10,000 but higher limits can often be purchased.
Costs may include repairs or replacements of another driver’s car, guardrail or fence — mailbox, home or business — mailbox rental reimbursement costs as well as reimbursement of rent-a-vehicle expenses while your own car is being repaired. It might even cover tow truck costs or reimburse rental vehicle rentals while your own is under repair.
Your choice to purchase full coverage auto insurance depends on your financial situation and risk tolerance. Lenders typically require full coverage coverage when issuing loans or lease agreements on cars, while otherwise it should be determined based on family finances and car value when deciding if paying the slightly higher premium would provide adequate financial protection should an accident happen (you can learn more about different types of auto insurance available.). (For more information see our blog posts about different kinds of auto insurance).
Comprehensive car insurance provides coverage against incidents other than collision, such as an animal ramming your hood or tree branches falling on it, as well as expenses related to theft, fire, flood and vandalism damage to your car.
Are You Needing Comprehensive Coverage for Your Vehicle? Depending on the value of your car, its premium costs and your risk tolerance, deciding whether or not comprehensive coverage is necessary may depend on many factors. Using tools like Kelley Blue Book to estimate its worth may help determine its necessity compared with premium costs.
Most states don’t mandate comprehensive auto insurance, but leasing and financing your car may require it as part of your contract. Furthermore, having comprehensive coverage could also be advantageous if you reside in areas with frequent natural disasters or theft; an auto insurance agent can help determine which policies would provide adequate protection in such circumstances.
Uninsured Motorist Coverage
Uninsured motorist coverage (sometimes combined with underinsured motorist coverage, which offers similar protections) protects you and members of your household against injuries caused by uninsured drivers, while in some states it may also cover property damage to your car.
This type of coverage covers medical bills and other expenses caused by accidents you didn’t cause if the at-fault driver doesn’t carry liability insurance. It helps minimize out-of-pocket expenses because claims for damages from an at-fault party can often be difficult to collect from them; especially when they leave the scene of the collision without insurance or refuse to cooperate in reporting it.
Financing or leasing your vehicle typically requires this coverage by law; it covers damages caused by drivers without insurance policies and typically has lower limits and higher deductibles than collision and comprehensive policies.