Coverage Policies in the United States of America


Anyone with a little experience of getting a vehicle insured will know that the matter is one that needs a great deal of decision making. The Insurance Company, will itself, give suggestions in relation to what sort of insurance policy will best suit the needs and usage of that particular customer. However, it is important for the insurer to have some prior knowledge of the various options available.

To begin with, the basic principle underlying an insurance policy is reimbursement. In very simple terms: the insurer pays a pre-decided amount of money to the insurance company, at regular intervals. The insurer, by doing so, earns the guarantee that the insurance Company will take care of any repairs or damage brought on by an accident. The insurance policy will completely cover the cost of repair. This is the fundamental concept. Insurance companies have built upon this base and have come up with various types of insurance policies.

In the U.S, The type of coverage provided by the insurance company depends solely of the type of policy selected and paid for -The most popular types being the liability policy and the comprehensive policy.

Liability Policy

The liability policy undertakes to pay for all costs incurred during an accident. The difference being that the policy will cover expenses even though the accident may have been caused by the negligence of the insurer. In short, it covers expenses claimed against the insured party. Furthermore, the policy will also cover expenses claimed against any driver operating the insured vehicle, given they do not reside at the same address as the insurer. The only time the insurance policy will not cover these other drivers is if the insurer has excluded them from the policy coverage.

Usually, insurance companies will suggest that the insurer add the names of those who are most likely to be using the vehicle. The liability coverage takes care of hospital bills in the event of wounds sustained as a result of the accident. The liability specifically covers cost when the insurer is at fault. Liability coverage is of two types – the combined limit and the split limit.

The combined limit type is the one in which the policy chooses to cover the medication costs as well as costs to repair property under one single fixed limit. The limit is fixed according to the premium charged on the policy. The policy will have some brackets which state what amount forms the upper limit that the policy will give out towards personal health aid and repairs. Obviously, cheaper premiums will have lower limits of coverage. The split limit is a kind of liability policy where the coverage provided is bifurcated.

There is a pre- determined amount allocated for medical bills and an amount allocated for repair of damage made to property. As with the combined limit type, the limits of the coverage provided by the split limit type is also determined by the cost of the premium paid and a few other factors.

Liability Policies are very popular in the US, contested only by the comprehensive policy, which undertakes a full coverage of costs. The only case in which the policy will not cover costs is if the accident is a result of a collision. In such cases, the blame is equal, and no one party can complete pin blame on the other.