Liability Coverage:
Liability coverage is the most fundamental component of auto insurance and is typically required by law in most states. It provides financial protection against claims for bodily injury and property damage caused by the policyholder's vehicle in an at-fault accident.
Bodily injury liability coverage pays for medical expenses, lost wages, and other damages incurred by other parties injured in an accident for which the policyholder is at fault.
Property damage liability coverage pays for repairs or replacement of vehicles, buildings, or other property damaged in an accident for which the policyholder is at fault.
Liability coverage also includes legal defense costs and settlements if the policyholder is sued as a result of an accident.
Collision Coverage:
Collision coverage provides financial protection for damage to the policyholder's vehicle resulting from a collision with another vehicle, object, or vehicle rollover, regardless of fault.
It covers the cost of repairing or replacing the policyholder's vehicle, up to the actual cash value (ACV) of the vehicle, minus the deductible chosen by the policyholder.
Comprehensive Coverage:
Comprehensive coverage provides financial protection for damage to the policyholder's vehicle caused by non-collision events, such as theft, vandalism, fire, hail, flood, falling objects, or collisions with animals.
It covers the cost of repairing or replacing the vehicle, up to the actual cash value (ACV), minus the deductible chosen by the policyholder.
Uninsured/Underinsured Motorist Coverage:
Uninsured/underinsured motorist (UM/UIM) coverage provides financial protection for the policyholder and passengers if they are injured in an accident caused by a driver who lacks sufficient insurance coverage or is uninsured.
UM coverage pays for medical expenses, lost wages, and other damages resulting from the accident, up to the policy limits.
UIM coverage kicks in if the at-fault driver's insurance coverage is insufficient to cover the full extent of the damages, providing additional compensation to the policyholder, up to the policy limits.
Medical Payments Coverage:
Medical payments coverage, also known as MedPay, provides reimbursement for medical expenses incurred by the policyholder and passengers as a result of injuries sustained in an auto accident, regardless of fault.
It covers medical bills, ambulance fees, hospital stays, and other medical expenses, up to the policy limits, and is available in "no-fault" states and as an optional coverage in other states.
Personal Injury Protection (PIP):
Personal injury protection, also known as PIP coverage, is similar to medical payments coverage but provides broader benefits, including coverage for medical expenses, lost wages, and essential services regardless of fault.
PIP coverage is mandatory in "no-fault" states and provides compensation to the policyholder and passengers regardless of who is at fault for the accident.
Additional Coverages and Options:
Auto insurance policies may offer additional coverages and optional features, such as roadside assistance, rental car reimbursement, gap insurance, custom parts and equipment coverage, and accident forgiveness, which provides forgiveness for at-fault accidents under certain conditions.
