A Guide to Auto Insurance Coverage Types
Understanding auto insurance can feel overwhelming. With various types of coverage available, it can be difficult to know which options are right for you. This guide is designed to explain the most common types of auto insurance coverage, helping you make an informed decision for your needs. At Insurance Company Dayton Ohio, ensuring you have the right protection is our priority.
What is Liability Coverage?
Liability coverage is a fundamental part of most auto insurance policies and is required by law in most states. It is designed to cover costs associated with injuries and property damage you may cause to others in an accident where you are found at fault.
Bodily Injury Liability (BI)
If you are responsible for an accident that injures other people, Bodily Injury Liability coverage is used to pay for their medical expenses. It can also cover their lost wages and, in some cases, legal fees if a lawsuit is filed against you. This coverage is typically represented by two numbers, for example, $25,000/$50,000. The first number is the maximum amount paid per person injured, and the second is the total maximum amount paid per accident.
Property Damage Liability (PD)
Property Damage Liability is intended to cover the costs of repairing or replacing another person’s property that you damage in an accident. This commonly includes the other driver’s vehicle, but it can also apply to other property like fences, buildings, or mailboxes.
What is Collision Coverage?
Collision coverage is an optional type of insurance that helps pay for repairs to your own vehicle after an accident, regardless of who is at fault. If your car is damaged in a collision with another vehicle or an object (like a tree or a guardrail), this coverage is what you would use. It typically requires you to pay a deductible, which is the amount you pay out of pocket before the insurance company covers the rest.
What is Comprehensive Coverage?
Comprehensive coverage, also known as “other than collision” coverage, is designed to protect your vehicle from damage caused by events that are not a direct result of a collision. This includes a wide range of incidents such as:
- Theft and vandalism
- Fire
- Natural disasters like floods, hurricanes, or tornadoes
- Falling objects, such as tree branches
- Damage from hitting an animal, like a deer
Like collision coverage, a deductible is usually required for a comprehensive claim.
What are Uninsured and Underinsured Motorist Coverages?
Even though liability insurance is legally required, not all drivers have it. Uninsured and Underinsured Motorist coverages are put in place to protect you in these situations.
Uninsured Motorist (UM)
If you are involved in an accident with a driver who has no insurance, Uninsured Motorist coverage is intended to pay for your medical expenses and, in some states, damage to your vehicle.
Underinsured Motorist (UIM)
Underinsured Motorist coverage is applied when you are in an accident with a driver who has insurance, but their liability limits are not high enough to cover all of your medical bills. This coverage helps fill the gap between their coverage limit and the total cost of your injuries.
Other Important Coverages to Consider
Beyond the main types, other coverages can be added to a policy for more complete protection.
Medical Payments (MedPay)
Medical Payments coverage is used to pay for medical and funeral expenses for you and your passengers after an accident, no matter who is at fault.
Personal Injury Protection (PIP)
Similar to MedPay, Personal Injury Protection is required in some states. It helps cover medical expenses but may also include reimbursement for lost wages and other non-medical costs.
Making the Right Choice
Choosing the right auto insurance involves balancing the amount of protection you need with what you can afford. Legal requirements set the minimum, but your personal financial situation and risk tolerance should guide your final decision. The coverages are selected to provide peace of mind and financial security on the road. For guidance tailored to your specific situation, the team at Insurance Company Dayton Ohio is available to assist you.