The most basic function of an auto policy is to protect your wallet if you are at fault for an auto accident. Liability Coverage on an auto policy consist of 2 parts – bodily injury and property damage. These two parts can also be combined into a single limit of coverage.
Bodily Injury coverage protects you if you injure someone else in an accident. This may include medical bills, pain and suffering, mental anguish and even lost wages for the other party.
Property Damage Coverage protects you from law suits for damage you cause to other people’s property. Whether you run into another vehicle or back into a garage door, both are examples of property damage insurance claims.
UI/UIM & First Party
This is the section of your auto insurance policy that protects you and your family if they’re injured in a car accident.
Underinsured and Uninsured Motorist Coverage (UI/UIM) are protection for you and your family against other drivers.
If they don’t carry enough coverage, then underinsured motorist coverage would pay. Uninsured motorist coverage works the same way, but for drivers who don’t carry any coverage at all.
You can purchase UI/UIM limits that match your liability limits above. So the more liability coverage you carry, the more UI/UIM you can carry.
Stacking is an option on your underinsured and uninsured motorist coverage. By stacking your limits, you can multiply your UI/UIM limits by the number of vehicles on the policy. So if you have a stacked limit of $100,000 and you have 3 cars, then that limit would equal $300,000 in total.
The Tort Option on an auto insurance policy is unique to Pennsylvania. At the time you purchase your auto insurance you select whether you want full or limited tort. By selecting full tort you are not limiting your rights to sue another party for pain and suffering. This includes suing your own insurance company.
If you select limited tort, then you cannot sue for for pain and suffering unless the injury sustained is a ‘serious injury’. So even if you are in pain for the rest of your life, you may not be able to collect if the injury is considered minor.
There are 4 coverages on an auto insurance policy that make up First Party Benefits. First party refers to coverage for you and your family in case of an auto accident – regardless of who is at fault. It doesn’t even matter if you’re in a vehicle or not. If you were involved in a hit and run while riding a bicycle, your auto first party benefits would still pay.
The coverage parts that make up first party benefits are exactly what they sound like. Medical Payments would pay for your medical bills if you’re involved in an auto accident. Work Loss is there to take care of your family if you can’t work due to an auto accident. Funeral and Accidental Death benefits act as small life insurance policies to pay for final expenses that help your family in a time of need.
Rather than having individual first party benefits, you can opt to have those four limits combined into one larger limit. If your policy is properly set up with Combined First Party Benefits, you have the potential to maximize your payout in a serious accident.
Medical bills in excess of $100,000 are considered Extraordinary Medical. This is broader coverage than is provided by traditional health care and can pay reasonable medical expenses beyond just hospital bills.
Physical Damage & Other
The Physical Damage section of an auto policy provides coverage for your vehicle. Often, people say they have full coverage.
Comprehensive Coverage has come to be known as ‘other than collision’ coverage. It covers most scenarios that aren’t a collision between your vehicle and another object.
For instance a tree falling on your vehicle, your car being stolen, or ice cream melting in the back seat and ruining your upholstery are all examples of comprehensive coverage. If you have a comprehensive claim, then you’ll be responsible for paying your comprehensive deductible.
One exception to the ‘other than collision’ rule is if you hit a deer. Even though you’re ‘colliding’ with a deer that would still be covered as a comprehensive claim; not a collision.
Many carriers will offer a lower deductible or no deductible for claims where all that is needed is a chip repaired in a windshield. Ask you agent how a Glass Only claim would work on your auto policy.
A Collision claim happens when your vehicle strikes another object or if another object strikes your vehicle. So for instance, backing into a post would be an ‘at fault accident’ and subject to your collision deductible. If your car was parked on the street and was in a hit and run, you’d still be subject to your deductible, but it would be considered a ‘not at fault accident’.
Most insurance carriers today will offer Towing and Roadside Assistance Coverage for a small price. This is typically a reimbursement for a short tow trip, a roadside jump, or a couple gallons of gas to get you to the closest gas station.
Rental Reimbursement Coverage pays you back for the expense of renting a vehicle while yours is in the shop.
Bear in mind, you have to have a covered insurance claim to qualify. So if your transmission blows up, sorry, no rental coverage here!
When you buy a new vehicle the value starts to depreciate right away. This may put you in a situation where the value of your vehicle is less than what you owe on the loan or lease. Gap Coverage makes up the difference so you don’t end up ‘underwater’ if your newer vehicle is totaled.
Everyone knows that auto accidents will make your policy premium increase. Accident Forgiveness is an feature that can be added or earned over time to prevent that increase. Each carrier has their own accident forgiveness program. So talk to your agent to get the details on how your plan works.
How can auto insurance protect you?
Use the yellow hot spots and explore how auto insurance can help protect against common risks.
Bodily Injury Liability Coverage
It’s easy to get distracted while driving. All it takes is an incoming text message, a fussy baby, or changing the radio station and your eyes are off the road long enough to crash into the slowing vehicle in front of you. As an owner/operator of the vehicle, you may be held financially responsible for any bodily injuries caused as a result of the accident.
Bodily injury liability covers your legal liability for a covered accident that involves injury to another person, up to the limit of liability you select. Purchase enough coverage to protect your assets should a claim be brought against you or if you are sued. You should also consider purchasing an excess liability policy which may provide additional limits of liability.
Property Damage Coverage
When involved in an auto accident, you and your family may be financially responsible for any damage caused by your vehicle to someone else’s property. Usually this means damage to someone else’s car, but it can really be any property damaged by your vehicle.
Property damage coverage protects you if your car damages someone else's property, such as another car, a fence, or building front. When choosing your property damage liability limits, you should consider all of your assets, including your home and future earnings because if you don't have enough coverage to protect all of your assets, those assets could be at risk if you're liable for damages that exceed your coverage limit. Consider having a higher limit of liability coverage – it may help you avoid having to pay out-of-pocket after an at-fault accident.
Medical Payments Coverage
Depending on the severity of the injuries suffered in an automobile accident, whether caused by you or by the other vehicle, it’s not uncommon for healthcare costs to run into the thousands of dollars, with a large portion being out-of-pocket expenses not covered by your health care plan.
Medical payments coverage can help cover all reasonable medical expenses and funeral expenses of covered drivers and passengers after an accident, regardless of fault. In most states, it's an optional addition to your car insurance policy.
Uninsured / Underinsured Motorist Damage Coverage
What happens when the driver who hit you doesn't have enough liability coverage? Or, even worse, takes off? According to the Insurance Research Council, this happens more than you might expect. In fact, it is estimated that one in seven drivers go uninsured, leaving you to pay out-of-pocket for damages and medical expenses not covered by the other driver.
Uninsured/underinsured motorist damage coverage may compensate you for bodily injury and lost wages caused by an uninsured motorist, a hit-and-run driver, a driver whose automobile insurance company is insolvent, or a driver who has not purchased enough coverage to pay for damages.
Physical Damage Coverage
Your automobile can be a fairly costly investment – one that is exposed to many potential losses caused by weather related events, theft, and other circumstances that may be out of your control.
Physical damage coverage can protect your vehicle if it is damaged in an accident (collision coverage), is damaged by something other than a collision (comprehensive coverage) with a vehicle or object or if your vehicle is stolen. This coverage is optional if your vehicle is paid in full, but it is coverage you should consider if you want to fully protect your vehicle.
Transportation Expenses / Rental Coverage
When your vehicle is being repaired or replaced due to a covered loss, you may have to rent a vehicle to get you to and from your daily responsibilities without any interruption. Vehicle rental can get expensive, especially over an extended period of time.
Transportation expenses/rental coverage is an inexpensive option you can add to your auto insurance policy to pay for the cost to rent a temporary replacement vehicle or the cost of public or private transportation if your vehicle is ever in an accident. This coverage is available in a variety of daily limits.