Your Coverage under a No-Frills Auto Insurance Policy

Although auto insurance policies differ based on coverage amounts, deductibles and the insured driver, among other things, there are a number of items that nearly every auto insurance policy will have. Each type of coverage may be worded differently from one auto insurance policy to the next, but they are general in terms of what they protect.

Keep in mind that auto insurance minimums will depend on the state in which you live, so always check your state’s minimum coverage amounts.

The following is the framework of a general auto insurance policy:

Bodily Injury Liability – This section of your auto insurance policy covers any injuries that you cause to another individual. Bodily injury liability insurance is a must because you may be sued by another motorist for a large sum of money. If you don’t have enough liability insurance you could be risking your other assets, such as your home or your savings. Most states have state minimums regarding liability coverage.

Personal Injury Protection – This section of your auto insurance policy covers any injuries that you or your passengers sustained while in your vehicle. Personal injury protection covers medical payments, lost wages and even funeral costs.

Property Damage Liability – This section of your auto insurance policy covers any damage you may have caused to someone else’s property. This may include their car or their property.

Collision – This section of your auto insurance policy covers the damage to your car when you are involved in a collision with another car. Your collision coverage will likely come with a deductible.

Comprehensive – Comprehensive coverage reimburses you for loss due to theft or damage, provided it wasn’t a result of a collision with another car or object. Comprehensive insurance usually has a deductible.

Uninsured Motorist Coverage – This section of your auto insurance policy covers you or a member of your family if you are hit by an insured or hit-and-run driver. This coverage may also be used when you are involved in an accident with an underinsured motorist or if you are hit as a pedestrian.