All About Automobile Policy Coverage

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An automobile insurance policy is designed to provide you with a level of protection against property, liability and medical costs if you are involved in an accident:

• Property coverage pays for damage to or theft of your car.

• Liability coverage pays for your legal responsibility to others for bodily injury or property damage. Most states require car owners to purchase a minimum of bodily injury and property damage liability insurance.

• Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

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Comprehensive and Collision Coverage

Collision: Covers damage to your car when your car hits, or is hit by, another vehicle or other object. This coverage is not required by a state, but if you have a loan or a lease, then the lien holder will require it.

Comprehensive: Covers your vehicle, and sometimes other vehicles you may be driving, for losses resulting from incidents other than collision. This coverage is not required by a state, but a lender may insist that you carry it until your loan is paid off.

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Types of Liability Coverage

Bodily injury liability (BI): This covers injuries that you, the designated driver or policyholder cause to someone else. It does NOT cover the cost of damage to your vehicle, or to you or other people on your policy. It is mandatory in most states.

Property damage liability (PD): Covers you or someone driving the car with your permission if the car damages someone else's property. It also provides you with legal defense if another party files a lawsuit against you.

Medical payments (MP) or personal injury protection (PIP): This no-fault coverage provides medical expenses to you and your passengers injured in an accident.

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Uninsured and underinsured motorist coverage (UM or UIM): 

This coverage will reimburse you if you are hit by an uninsured or hit-and-run driver, or when an at-fault driver has insufficient insurance to pay for your total loss.