Working as a California car insurance agent has help me realize people always want to get a good deal on their insurance premiums. What my job has also taught me is that people will spend more time trying to get a good deal than understanding what the deal actually is. Recently, I have been hearing an increasing amount of stories about someone's insurance nightmare. While plenty of these could actually be cases of "insurance gone wrong", I feel that some are actually attributed to the insured not knowing what their policy actually covers. By learning the different forms of car insurance coverage, you will be able to not only ensure you are receiving the best deal but you will also ensure you are properly protected.
Covers: Damages done by the insured to other people or their property
Limits of liability: Bodily Injury per person / Bodily injury per occurrence / Property damage
Examples of limits: ($15,000 / $30,000 / $5,000) is the same as (15 / 30 / 5)
Bodily injury - If you cause an accident that injures other people, this insurance will pay the amount you are legally obligated to pay for those injuries and related costs, which can include:
Property damage - If you ever cause an accident, your Property Damage Liability coverage will pay for the damage done to anyone else's property, whether it's another vehicle, a lamppost, or even a house, up to the selected amount.
Liability is the most basic form of coverage. In order to operate a vehicle, it is usually required by law to have liability insurance. Liability will take effect if you are driving your car and crash into anything or anyone (at fault accident). The policy will pay any damages you are found legally responsible for until the dollar limits specified. If you have a liability only policy and are at fault in an accident, it will not cover any damages to your car or any injuries you may have. If you have a liability only policy and you not at fault in an accident, the policy of the driver at fault will pay for any damages and injuries you may have.
Covers: Damages done to the insured by a driver with no insurance or insufficient insurance limits
Limits of liability: UMBI per person / UMBI per occurrence
UM Property Damage: Exists but is usually limited to low amounts like $3500. Anything more should be covered under comprehensive and collision.
Examples of limits: ($15,000 / $30,000) is the same as (15 / 30)
Covers: Damages or loss towards or of the covered vehicle
Limits: Will pay to repair or replace the insured vehicle according to its current value
Deductible: Is the amount you are required to pay after a covered loss in order for a claim to be covered
Examples of deductibles: ($500 / $500) is the same as (500 / 500)
Covers: Any medical the insured may need as a result of an accident regardless of who is at fault.
Limits: Usually limited to treatment received within the first 3 years after an accident and limited to a specific dollar amount.
Common Med pay amounts:
Covers: road side services and towing for a vehicle
Limits: usually restricted to only vehicles listed on the policy and only after a covered claim