Many car owners consider auto insurance terms too foreign or alien. Of course, no one expects that an average car owner would have a glossary list in his pocket or in his car. And not everybody presumes that the insurance agents have given these drivers the full insurance lecture.
Young drivers, especially those who just got in the driver’s seat for the first time, won’t be able to deal with numerous insurance policies. The only thing they know is that they have a car and they need insurance. They’d probably be seen confused when agents ask them what kind of auto insurance they need.
Auto insurance policies are contracts car owners purchase to cover losses caused by traffic accidents or theft. It is usually comprised of six types of coverage.
Bodily Injury Liability includes coverage for the injuries the driver or the policyholder caused to others. This includes the medical bills and lost wages. This can be purchased to reduce the risk of losses when the driver will be sued for damages in future accidents. Property damage liability like bodily injury is a good investment in case the driver is sued for damaging properties. It covers the repairs and replacement costs for the cars, properties and even fences that the driver had accidentally destroyed.
Collision coverage deals with covering the repair costs or replacement cost for the driver’s own vehicle. Premiums for this coverage may be reduced with deductibles. Deductibles range from $100 to $1000 and are paid before the insurance company pays the driver the remainder of the coverage.
Medical payments, also known as MedPay, cover the medical bills suffered by the driver and the passengers because of an accident. Medical expenses for drivers of borrowed cars are also covered. This coverage will cover the bills regardless of who caused the accident. Property Injury Protection or PIP covers not only the medical bills but the lost wages, psychiatric and rehabilitation for the driver and the passengers who were injured in a vehicle accident. Funeral expenses are also covered by this policy.
Comprehensive coverage pays for losses or damages that are not caused by a collision with another car or property. It covers losses from theft and other instances such as fire, natural disasters and even riots.
Uninsured Motorist Coverage or UM covers medical expenses incurred by the policyholder whether in a collision or in a hit-in-run incident caused to him or her by an uninsured driver. Underinsured Motorist Coverage or UIM works the similar way except that the driver who caused the incident is underinsured. The coverage of the underinsured driver will be first applied to the losses and the policyholder or victim’s UIM covers the rest. UM and UIM covers claims for pain, suffering and even property.
Auto insurance state requirements differ and it is very important for car owners and drivers to be well educated about them. Drivers shouldn’t only avail of these policies because it is required by law but also because of the risks provided by the open roads and other cars.