The most important thing to know about auto insurance is that it protects you financially when you cause property damage or bodily injury to other people, or if you damage someone else’s vehicle. If you’re ever involved in an accident and need assistance, call our office as soon as possible so we can help get things back on track for you!
In this post, we find out What Is Standard Coverage For Auto Insurance, what is recommended bodily injury coverage, what does car insurance not cover, and what are the different types of coverage for auto insurance.
What Is Standard Coverage For Auto Insurance
Everyone should have auto insurance. It protects you financially if you cause property damage or bodily injury to other people, or if you damage someone else’s vehicle.
What Is Covered by an Auto Insurance Policy?
Coverage is a broad term used by insurers to indicate what they will pay if you file a claim. The following are some of the most common coverage types:
- Liability coverage pays for injuries or property damage you cause to others in an accident. It also covers your legal expenses if you are sued.
- Medical payments coverage reimburses others for reasonable medical expenses (up to the limits of your policy) resulting from bodily injury sustained in an automobile accident, regardless of fault. This can include injuries sustained while riding as a passenger or pedestrian within the covered vehicle, even if they’re not related directly with the collision itself (for example, someone who falls down stairs after being hit by another car).
- Uninsured motorist coverage protects against accidents caused by other motorists whose insurance policies don’t provide adequate liability protection—for example, those who drive without insurance altogether or have inadequate limits on their policies (more about this later).
Liability insurance
Liability insurance covers the cost of damage you cause to other people and their property. Liability insurance is a legal requirement for driving in most states, and it’s also required by car rental companies.
- What does liability insurance cover? Liability coverage helps pay for bodily injury, and property damage caused by your vehicle in an accident. If someone is injured or suffers property damage as a result of your actions while driving, you’re liable (responsible) for damages they incur—and that’s where liability coverage comes into play.
- Who needs it? Anyone who drives a car or motorcycle on public roads needs liability protection because they can be held legally responsible for harm caused by their vehicles or operations thereof, whether intentional or unintentional. If you hurt someone else with your car — even if it’s just a scratch on their bumper — you’ll want to carry liability coverage so that you can pay medical bills, replace lost wages due at work due to being hurt in an accident caused by someone else’s negligence (or lack thereof), etcetera..
Personal injury protection (PIP)
Personal injury protection (PIP) is a type of coverage that pays for medical expenses, lost wages and other expenses when you are injured in a car accident.
In most states, PIP is required if you have a car insurance policy. If it’s not required by state law, then you probably don’t need it as part of your standard auto insurance. However, it can be beneficial to have PIP because it will pay for some expenses that would otherwise fall on the consumer—like lost wages if you’re unable to work after being injured in an accident.
Some states also require uninsured/underinsured motorist coverage (UM/UIM). That type of policy provides coverage if someone else who causes an accident has no or low liability limits on their auto insurance policy and doesn’t have sufficient assets to pay any judgment against them on behalf of their victim(s).
Collision coverage
Collision coverage is the section of your auto insurance policy that covers damage to your car and the damage you cause to other people’s vehicles.
How much collision coverage you need depends on the value of your vehicle, but as a general rule, most experts recommend that drivers have at least $1,000 in coverage per person (i.e., $2,000 total) and $5,000 for property damage per accident. You can increase these amounts if you want to be sure that you’re fully protected from collisions with uninsured drivers or those who refuse to pay for their share of the damages caused by accidents involving multiple drivers. Collision coverage also protects against theft, fire and vandalism—whenver your car suffers damages as a result of an unfortunate event beyond its repair costs or market value.
Collision insurance is sometimes referred to as comprehensive coverage because it protects against all sorts of unforeseen events like tornadoes destroying entire neighborhoods or floods rising up through city streets after heavy rains fall during summer months here in New Orleans!
Comprehensive coverage
When you buy comprehensive insurance, your insurer will cover the cost of damage or stolen property in a variety of situations. The most common reason drivers choose this coverage is because they have expensive items in their car that they don’t want damaged or stolen (think leather seats, cameras, or even your pet).
Comprehensive coverage also covers vandalism and glass breakage. If someone breaks into your car and steals something from it or damages it while they’re there—for example, if they punch through the passenger-side window to get at your laptop—your comprehensive policy will reimburse you for the full cost of repairing them.
Another common type of incident covered under comprehensive insurance is uninsured/underinsured motorist accidents: when another driver who doesn’t have enough auto insurance causes an accident with you (or hits you with their uninsured vehicle), your insurer will pay for any damages incurred by that crash.
Uninsured and underinsured motorist insurance
Uninsured motorist insurance covers you if you are hit by a driver who doesn’t have any car insurance at all. The coverage will help pay for medical costs, lost wages and other damages that might be incurred in the accident.
Underinsured motorist insurance also protects you and your family if another driver with car insurance is at fault for an accident and doesn’t have enough coverage to pay for all of your injuries or damage to property like your vehicle.
Auto insurance covers you financially when you cause property damage or bodily injury to other people, or when you damage someone else’s vehicle.
Auto insurance covers you financially when you cause property damage or bodily injury to other people, or when you damage someone else’s vehicle.
The following are different types of coverage:
- Property Damage: This type of coverage pays for any damage your car causes to another person’s car, a house, fence, mailbox and other property. It also covers injuries that occur after an accident in which the driver was at fault.
- Bodily Injury Liability Coverage: This category provides payment if you were at fault for an accident that caused bodily injury or death to another person.
- Collision Coverage: This form of insurance helps pay for repairs if your car collides with another vehicle or object on the road. Collision coverage may be optional depending on what state you live in; however it is usually required by lenders if they loaned money toward purchase of your vehicle. If collision coverage isn’t required by law but has been included by default (for example on an auto lease), then it would apply only if there is no other liability coverage available such as UM/UIM to protect against accidents where either party might be found responsible — commonly referred as hitting-and-run accidents where no one saw who caused them but both parties have suffered damages as result thereof
what is recommended bodily injury coverage
If you cause a car crash in which someone else is injured, your bodily injury liability (BI or BIL) insurance pays for expenses related to injuries they sustain in the crash.
It is one of the two forms of liability car insurance coverage that pay for any damage you cause other drivers.
Nearly every state sets a minimum requirement for bodily injury coverage to demonstrate your financial responsibility on the road, such as $25,000 per person. But consumers have the option to buy coverage beyond the legal minimum.
What does bodily injury coverage pay for?
Bodily injury liability insurance pays for injuries you cause to another driver if you are at fault in the accident. It includes medical bills as well as lost wages and even funeral costs if applicable.
Bodily injury does not cover the medical costs of injuries you may get in the accident. It is considered “third-party” insurance since it only pays for damage to other drivers and passengers (you’re the “first party”).
What is covered under bodily injury coverage
The types of expenses a third party can file against your bodily injury liability policy include:
How to understand bodily injury liability limits
Your bodily injury coverage is stated in part of a three-number format such as “25/50/25.” In the three-number format, the first two numbers are the bodily injury coverage limits and the third is for property damage, a separate type of coverage.
The first number is the amount of coverage for one person in the accident, while the second number represents the amount covered in the entire accident. So, for example, if you are quoted a 25/50 limit for bodily injury, it means that the insurance policy will cover up to a maximum of $25,000 per person injured in an accident and a total of $50,000 in claims for a single accident.
We’ll look at two examples to explain how bodily injury liability works.
Combined single limit (CSL) is another — and less common — type of limit consumers may purchase. Unlike the split limit, CSL has one limit that applies to the whole accident and is not constrained by the number of injured people. The flexibility of CSL makes this type of limit more expensive, and not every car insurance company provides this option.
Minimum bodily injury liability requirements by state
Each state has a minimum amount of coverage you are required to have as part of your auto insurance. The most common minimum BIL limit is $25,000 per person, but your state may have a different minimum. Florida doesn’t even require this coverage.
State minimums for bodily injury liability are displayed in the following table:
How much bodily injury liability coverage should you have?
You should get limits that match the value of assets you have, or the highest limits you can afford. That’s because if your car insurance isn’t enough to pay for the damage you cause, the other driver may take you to court and sue for the remainder. If the judges rule in their favor, your assets may be liquidated to pay for the court damages.
Higher liability limits provide much more protection, without significant cost.
We found that doubling your bodily injury liability coverage from 25/50 to 50/100 results in a rate increase of only 18%. For each additional dollar you spend, you get an extra $419 in protection.
How much does bodily injury liability car insurance cost?
Bodily injury liability insurance gets cheaper the more coverage you buy. A state minimum coverage policy in Pennsylvania with $15,000 per person/$30,000 per accident of bodily injury coverage costs $532 on average. However, buying bodily injury coverage that’s more than six times more generous ($100,000/$200,000) increased our sample driver’s rates by only 18%, to $627 per year.
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How to file a bodily injury liability claim
BI claims are considered “third-party claims,” which means you are filing a claim against the at-fault driver’s insurance company.
In order to make sure a reasonable amount of your expenses are paid for, you will be required to document and keep a record of the accident. Before making a claim, you should be prepared to provide:
How much is the average bodily liability claim worth?
Compared with property damage liability claims, which have averaged around $3,600 per claim over the last 10 years, bodily injury claims tend to be significantly higher.
In 2019, the average bodily injury claim was $18,417 as reported by Insurance Services Office Inc. (ISO). Bodily injury claims tend to be relatively infrequent, however, with only 1.1% of policies experiencing a claim that year. Based on this data, most bodily injury claims fall within reach of the minimum coverage limits required by the states, with a few exceptions, such as Florida.
This should not be used as the sole piece of information in determining your limit, however. These numbers do not indicate a wide range of claim amounts, ranging from the fortunately low to catastrophically high claims.
Frequently asked questions
What is bodily injury liability coverage?
Bodily injury coverage pays for financial damage to others that occurs as a result of a car crash that you’re responsible for. This could include medical bills, lost wages and legal fees.
Do I need bodily injury liability coverage?
In most cases, yes. Every state except Florida requires BI liability coverage in order to register a car.
How much bodily injury coverage should I buy?
You will definitely need to buy at least enough to meet the minimum required amount in your state, but we recommend drivers buy more based on their net worth and how often they drive, as a few extra dollars per year could save you tens of thousands if you’re ever in an at-fault crash.
Is bodily injury coverage expensive?
The cost of BI liability coverage depends on how much you buy, as well as other factors like your driving history. The more coverage you buy, the better the deal. For example, while the average cost of a legal minimum insurance policy is $532 per year in Pennsylvania, doubling your BI coverage only increases your premium by about 10%.
what does car insurance not cover
Car insurance protects you financially in the event of an accident, paying for damage you cause to other people and their property. It can also cover damage to your own vehicle, either from an at-fault accident or from other perils such as fire and theft (as long as you’ve added comprehensive and collision coverage to your policy).
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Car insurance covers many different situations, but it doesn’t cover everything. Even things you would assume are covered may not be included in a standard auto insurance policy, like classic cars and stolen belongings. So, what exactly is not covered by your car insurance?
You won’t be covered for damage beyond the limits of your policy, which is why drivers should set high levels of liability coverage
Types of damage that aren’t covered by your auto insurance include wear and tear, intentional damage, and accidents that violate the terms of your insurance
Insurance coverage varies from state-to-state and policy-to-policy, so it is important to work with your insurance representative to make sure you understand exactly what is and is not covered by your policy
Many companies sell additional coverage for things that aren’t covered under a standard auto insurance policy, like gap insurance and car repair insurance
1. Other people driving your car
While it is possible that your insurance company will cover another driver using your car, it is far from guaranteed. Most insurance companies are going to have questions about this other driver before they agree to cover any damage they caused in an accident. Do they live with you? Are they related to you? Do they have active insurance on their own vehicle?
Typically, people who live with you must be named on your insurance policy to be covered if they drive your car. In fact, many companies require you to include or exclude every person of driving age who lives in your home, and if an excluded driver gets into an accident in your car they won’t be covered.
Some insurance companies will cover accidents if the driver is a member of your family, but not a friend or associate. Other insurance companies will cover anyone who has permission to drive your car, but with limited coverage. There is no universal answer to whether or not an insurance company will cover other drivers, so check with your insurance representative to make sure you know the specifics of your policy.
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2. Regular repairs and general maintenance
Whether you are talking about something as simple as changing your oil or complex as replacing an oxygen sensor, car insurance isn’t going to cover basic maintenance, repairs, or general wear and tear on your vehicle. These expenses are considered part of owning a car and the responsibility for those costs falls onto the owner of the vehicle.
Even extended warranties and car repair insurance don’t cover basic maintenance or repairs, which means drivers need to budget for those extra expenses to keep their car properly maintained.
3. Personal belongings stolen from your car
Auto insurance only covers your vehicle and any damage you may cause while driving. If your personal belongings are stolen from your vehicle or, worse, your car gets stolen with your stuff inside, your car insurance can pay to replace your car itself, but it won’t pay to replace your belongings. If you want to file a claim for property stolen from your vehicle, that claim would go through your renters or homeowners insurance policy.
4. Classic, exotic and performance cars
Standard auto insurance policies are designed for a wide variety of cars, but classic, exotic, and performance cars require insurance policies tailored to their specific needs. Not only are these cars more expensive than your standard vehicle, but they are more likely to be stolen and need specialized, expensive repairs when they are damaged. The increased costs and unique needs associated with classic, exotic, and performance cars mean that these vehicles can’t really be covered under a traditional auto insurance policy, and you’ll have to shop for specialty insurance.
5. Types of damage that aren’t covered by car insurance
Most people assume that if you have insurance you will be covered for any damage you cause or any damage to your vehicle, but this isn’t the case. There are limits to your insurance coverage, including:
Damage that exceeds your limits of liability: Your liability limits don’t stop you from being held responsible for the damage you cause if you are at fault in an accident. For example, Alabama requires minimum liability levels of 25/50/25. If you choose to carry the minimum level of liability coverage and you hit someone in a Range Rover, you could easily cause $60,000 worth of property damage but only have $25,000 in property damage liability. Once the insurance company has paid out the $25,000 from your policy, you are still responsible for the other $35,000 in damages
Damage caused by normal wear and tear: While comprehensive and collision coverage will pay to repair damages caused in an accident, normal wear and tear aren’t covered. This means small scratches, tiny dents, rust and chipped paint aren’t covered under your insurance policy
Intentional damage (sometimes including a DUI): If you purposely damage your vehicle, it won’t be covered by your insurance. This includes smaller things, like breaking a window because you’re locked out of your car, as well as more extensive damage and fraud, like setting your car on fire for the insurance money. Depending on the situation and the details of your insurance policy, this can include damage caused because you were under the influence
what are the different types of coverage for auto insurance
Car insurance can help prevent a financial loss if you’re involved in an accident. Without it, you could be liable for accident-related injuries and damage. Luckily, there are many types of insurance coverage to choose from. The amount of protection you receive depends on the kinds you purchase.
The most common types of car insurance coverage include liability, collision, personal injury protection, uninsured and underinsured motorist, comprehensive, and medical payments. When shopping for a new policy or reviewing your existing one, it’s important to understand how each can help protect you as you compare quotes.
6 Common Types of Car Insurance Coverage
When purchasing a car insurance policy, there are six main types of coverage to choose from. Here’s a description of each to help you decide what’s best for you.
1. Liability Coverage
Except in New Hampshire and Virginia, all states require licensed drivers to maintain liability coverage. Why? Because it helps protect other people on the road. If you cause an accident, your liability coverage kicks in to pay for injuries and damage you cause to someone else, up to your policy’s limits.
Without it, you could be responsible for covering the cost of medical bills and repairs out of pocket. Plus, you could face fines and other penalties for driving uninsured. Also, when selecting liability limits for your policy, remember that your state’s minimum requirements probably aren’t high enough to cover injuries and damage after a severe accident. That’s why opting for higher limits provides greater protection.
2. Collision Coverage
Collision coverage is optional in all 50 states. However, if you have an auto loan or lease, your lender or leasing company will probably require it.
3. Personal Injury Protection Coverage
Personal injury protection (PIP) coverage is mandatory in some states and optional in others. So, be sure to check your state’s requirements.
Coverage under PIP varies by state. It may include payment for medical expenses, lost wages, and funeral expenses for you and your passengers.
4. Uninsured and Underinsured Motorist Protection
Although nearly every state requires drivers to carry liability coverage, many people drive without it. According to the Insurance Research Council, an estimated one in eight drivers in the United States was uninsured in 2019.
Uninsured and underinsured motorist (UM/UIM) coverage helps pay for accident-related expenses. This coverage kicks in if you get hit by an uninsured driver or a driver whose policy limits are too low to cover your bills.
Some states require drivers to carry UM/UIM coverage, while others don’t.
5. Comprehensive Coverage
Comprehensive insurance coverage protects drivers against damage not caused by a collision unless the crash occurs with a deer. It helps protect against severe weather, fire, theft, vandalism, animal damage, and more.
Like collision, comprehensive coverage is optional in all states. However, if you have a loan or lease, your lender or leaseholder will probably require it.
6. Medical Payments
Medical payments coverage can help pay for you and your passenger’s medical bills or funeral expenses after an accident. However, unlike personal injury protection, this optional coverage doesn’t typically cover lost wages.
Also, medical payments can help pay for treatment if you’re injured as a passenger in someone else’s car. It also covers payments if you get hit by a vehicle as a pedestrian.