Auto Insurance Deductibles And Coverages

"Deductible" and "coverages" are terms that insurance companies have used forever. But many of us still don't know exactly what they mean or understand how they affect our auto insurance. So without further ado, here's a primer.

What's a Deductible? How Should I Choose Mine?

Put simply, a deductible is the amount that you agree to pay up-front when you make an insurance claim, while the insurance company pays the rest up to your coverage limit.

When choosing your deductible, think about how much you're willing to pay out-of-pocket if you need to make a claim. And balance that against the fact that higher deductibles typically mean lower premiums. It really comes down to what makes you the most comfortable.

What are Common Coverages?

Auto insurance policies generally consist of several kinds of coverages. Because insurance laws vary state-to-state, the following information is here to give you a broad overview of typical coverages and isn't a statement of contract.

Auto Liability

Auto liability coverage pays for the damage if you're legally responsible for injuring someone, or for damaging another vehicle (or other property) in an auto accident.

Auto liability coverage falls into two categories:

• Bodily Injury Liability – medical expenses, pain and suffering, lost wages, and other special damages.
• Property Damage Liability – damaged property, and may include loss of use.

Liability coverage also pays legal defense and court costs.

State laws usually dictate the minimum amounts of insurance required, but higher amounts are available.

Personal Injury Protection (PIP)

This coverage pays your (or another covered driver's) reasonable and necessary medical expenses for treatment caused by an auto accident. It may also pay for:

• Rehabilitation
• Lost earnings
• Replacement of services (e.g., child care if a parent is disabled)
• Funeral expenses

This coverage varies by state and specific policy.

Medical Payments

This coverage is available in many states. It pays for necessary medical and funeral expenses for those covered when the expenses are caused by an auto accident.

This coverage varies by state and specific policy.

Collision

This coverage helps pay for loss or damage from an accident to a covered vehicle caused by:

• Collision with another vehicle
• Collision with an object
• A vehicle rollover

A deductible is required.

Comprehensive

This coverage helps pay for loss of or damage to an insured, covered vehicle that is not caused by a collision or vehicle rollover. Examples of this type of damage or loss include:

• Fire
• Wind
• Hail
• Flood
• Vandalism
• Theft
• Hitting an animal

A deductible may apply.

Uninsured Motorist

This coverage pays for damages if you or another covered person is injured in an auto accident caused by a driver who does not have Liability Insurance. In some states, it may also pay for property damage.

This coverage varies by state and depends upon policy provisions.

Underinsured Motorist

This coverage pays for damages if you or another covered person injured in an auto accident caused by another driver who is considered to be underinsured as defined by the policy.

This coverage varies by state and depends upon policy provisions.

Rental Reimbursement

This coverage pays for rental expenses if your car is disabled due to a covered loss.

Daily allowances or limits vary by state or policy provisions.

Emergency Road Service

This coverage pays for having your auto towed due to a breakdown.

Towing limits vary by state or policy provisions.

This information is only a general description of available coverages and isn't a statement of contract. All coverages are subject to all policy provisions and applicable endorsements.