Having car insurance is a mandatory requirement for owning and driving a vehicle in every state except for New Hampshire, but what that auto coverage gets you (and, perhaps more importantly, what it doesn’t) is something that splits into a thousand different variables and what-ifs when you start considering every possible situation. What does your auto insurance company offer, and at what price? What packages are available? What can you add or leave off? How many people are you covering? How many vehicles do you own? What are the makes and models of the vehicles in question?
There are six core parts to your typical car insurance quote; and, depending on your state, which of them you’ll legally need at a minimum will vary. There are many, many (many, many, many) different ways that car insurance quotes can be tailored to your situation and chosen company, but they’ll almost always fall into some combination of these packages. Let’s break them down:
Liability Coverage: Paying for Others
Liability coverage is cornerstone of all auto insurance companies and what you’ll need at a bare minimum. Liability insurance pays for the damage and injuries that you cause other drivers when you get into an accident. Your liability coverage is usually expressed as three numbers — XX/XX/XX — and each number specifies the amounts in the thousands that your auto insurance company will pay for:
- Bodily injury (per person): medical expenses for each individual you injured
- Bodily injury (per accident): the total amount that can be covered with the above money
- Property damage (per accident): the total amount that can be paid to repair or replace the other party’s car and/or other damaged property
So a 25/50/25 policy has your company paying up to $25,000 for each other person in the accident, up to $50,000 total, and another $25,000 for damage to their property, car or otherwise. Any expenses beyond that will have to come out of your own pocket.
The higher your numbers, the more you’ll have to pay for your policy, but the better your chances that you won’t have to pay any additional amounts should you cause an accident.
Medical Payments Coverage: Paying for Yourself
Medical Payments (MedPay) Coverage is the other side of the liability coin: it’s for you! MedPay goes towards your own injury expenses, but won’t cover anything outside of them and typically comes in fairly small amounts. Most important about MedPay is the fact that it covers you regardless of who was at fault in an accident. Whether it’s something you really should pay for or not depends on what your existing health insurance is like: if you’ve already got solid protection for injuries suffered on the road, you probably don’t need it, but those with insurance that doesn’t cover these conditions may want to think seriously about adding it. As a bonus, some companies will allow you to use MedPay as secondary insurance to your primary plan to help better cover you.
Personal Injury Protection: Paying for Yourself and Your Passengers
Personal injury protection (known as PIP) is an upgraded sort of MedPay that gives you more money in more situations. It helps pay for the medical expenses of you and your passengers when you have an accident, regardless of fault, but also covers lost wages and/or other benefits that health insurance won’t.
16 states require you to have MedPay or PIP due to “no-fault” laws, which requires all parties to cover their own damages.
Uninsured Motorist Coverage: Paying When Others Can’t
Most states require liability insurance, but that doesn’t stop people from getting on the road without it. If they get you into an accident, they may very well not have the money to pay for your damages, even if you sue, which is where uninsured motorist (UM) and underinsured motorist (UIM) coverage comes in. Consider it a failsafe type of car insurance. Plus, it’s required in 19 states (Texas not included).
Collision Coverage: Paying for Your Car When it Crashes
Collision coverage is like MedPay, but for your vehicle: it’s money for your damaged car, but only pays out in certain situations. In this case, it covers you if your vehicle crashes into an object like another car, a pole, or it flips. Collision coverage will either pay to fix your car or reimburse you for its current value if it’s totaled.
Comprehensive Coverage: Paying for Your Car When Anything Else Happens
Comprehensive coverage is an “upgraded’ type of collision policy that pays out in situations beyond typical road accidents, for damage that’s caused by theft, vandalism, inclement weather, or hitting an animal. It is typically sold as a bundle with collision coverage and comes with a deductible. No state requires it, but it may be required by a lender if you’re financing or leasing a car.
Getting the Car Insurance You Need
Now that you’ve got the basics of your auto insurance company’s lingo down, you’ll need to start looking into the specifics of pricing and what you most need for you and your family. It might seem like a daunting task, but don’t let the numbers and acronyms scare you away! Once you break it down, you should find the navigation of these choppy waters a lot easier.
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