Understanding Your Auto Insurance
Auto insurance can seem confusing. But once you understand the different types of coverages that make up your policy, it’s not hard at all. Your auto insurance is really a package of seven primary coverages. Taken together, these coverages make up a standard auto policy. Each of these coverages has its own separate premium. Your premium payment is the total of these separate premiums.
In addition to the primary coverages, for additional premiums you can also add on coverages such as GEICO’s
Mechanical Breakdown Insurance and
Emergency Road Service.Bodily injury liability provides protection if you injure or kill someone while operating your car. It also provides for a legal defense if another party in the accident files a lawsuit against you.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’s a good idea to have the same level of coverage for all of your cars.
Medical payments, no-fault or personal injury protection coverage usually pays for the medical expenses of the injured driver and passengers in your car. There may also be coverage if you are injured by a vehicle as a pedestrian.
Uninsured motorists coverage pays for your injuries caused by an uninsured driver or, in some states, a hit-and-run driver, in a crash that is not your fault. In some states there is also uninsured motorist coverage for damage to your vehicle.Given the large number of uninsured motorists, this is very important coverage to have, even in states with no-fault insurance.
Comprehensive physical damage coverage pays 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. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket.
Collision coverage pays for damage to your car when your car hits, or is hit by, another vehicle or other object.To keep your premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car.
Property damage liability protects you if your car damages someone else’s property. 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.
Rental reimbursement coverage pays for a rental vehicle (usually up to $25 a day) when the insured's vehicle is out of commission as a result of a loss covered under comprehensive or collision coverages.
