TYPES OF COVERAGES

Liability Coverage

Liability coverage is offered for bodily injury BI or property damage PD for which the insured driver is deemed responsible. The amount of coverage provided (a fixed dollar amount) will vary from jurisdiction to jurisdiction. Whatever the minimum, the insured can usually increase the coverage (prior to a loss) for an additional charge.

Bodily Insured Liability (BI)

Covers other people's bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets. Bodily injury liability covers injury to people, not your vehicle. Therefore, it is a good idea (and usually a company requirement) to have the same level of coverage for all of your cars.


Property Damage Liability (PD):

Bodily Injury Liability does NOT cover you or other people on your policy. Coverage is limited to the terms and conditions contained in the policy. It is mandatory in most states.

Covers you if your car damages someone else's property. Usually it is their car, but it could be a fence, a house or any other property damaged in an accident. It also provides you with legal defense if another party files a lawsuit against you. It is a good idea to purchase enough of this insurance to cover the amount of damage your car might do to another vehicle or object. Coverage is limited to the terms and conditions contained in the policy.

Comprehensive Full Coverage

Full coverage is the name commonly referred to as Comprehensive and Collision. Insurers generally do not use this term because it implies broader coverage than actually exists.

Collision

Collision coverage provides coverage for an insured's vehicle that is involved in an accident, subject to a deductible. This coverage is designed to provide payments to repair the damaged vehicle, or payment of the cash value of the vehicle if it is not repairable. Collision coverage is optional, however if you plan on financing a car or taking a car loan, the lender will usually insist you carry collision for the finance term or until your car is paid off. Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) is the term used by rental car companies for collision coverage.

Comprehensive

Comprehensive (Other Than Collision) coverage provides coverage, subject to a deductible, for an insured's vehicle that is damaged by incidents that are not considered Collisions. For example, fire, theft (or attempted theft), vandalism, weather, or impacts with animals are types of Comprehensive losses.

Covers your vehicle, and other vehicles you may be driving for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire, or animals. It pays to fix your vehicle less the deductible you choose. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket. Coverage is limited to the terms and conditions contained in the policy. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.


Uninsured Motorist (UM)

Most states have laws that require vehicle owners to have uninsured motorist (UM) insurance, which protects people injured in accidents caused by uninsured motorists. Victims would receive an amount equal to what they would have been paid had the motorist had been insured.

Uninsured motorist laws are different from state to state, but usually have two things in common:

    * Requirement that insurance covers all payments that the victim is entitled to, and
    * Meets the definition of uninsured vehicle (see below for definition)

Most UM policies spell out the following items:

    * Who is an "insured"?
    * Who is considered "uninsured"
    * The types of vehicles that are and are not covered by the UM policy (ex. Whether motorcycles or trailers will be covered.)

It's critical to understand what your policy covers in regard to uninsured motorists. Don't wait until you're in an accident to find out.