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The term full coverage generally means that the insurance policy
has both liability coverage and coverage for damage to your vehicle.
The term full coverage does not mean that everything is covered
no matter what happens.
You should carry as much liability coverage as you can comfortably
afford because damage claims today are sometimes settled for millions.
State minimums don't come close to covering the cost of a serious
accident. You should carry bodily-injury coverage of at least $100,000
per person, and $300,000 per accident, and property-damage coverage
of $50,000, or a minimum of $300,000 on a single-limit policy.
Raising your limits isn't expensive: $300,000 in coverage costs
20% more than $100,000, on average. The more coverage you buy, the
less you have to pay per $1,000 of coverage.
Detailed outline of the types of coverages
Liability
Liability Insurance pays to someone else for Bodily Injury and/or
Property Damage which you may have caused them and for which you
may be legally liable. The first two (2) numbers referenced above
(100/300) are the policy limits of a potential pay-out to cover
your Bodily Injury Liability. Your insurance company will pay up
to $100,000.00 to any one (1) person and no more than a total of
$300,000.00 to three (3) or more people who may have sustained a
Bodily Injury in the same covered accident. The last number (50)
means that your insurance will pay up to $50,000.00 to the owner
of any property you may have damaged and for which you may be legally
liable. When a state has a mandatory insurance law, it is Liability
Insurance that is being referred to.
UM (Uninsured Motorist)
"UM" stands for "Uninsured Motorist" Coverage.
This will cover you if you sustain a Bodily Injury in an auto accident
in which the other party was at fault and the other vehicle was
uninsured. Like the "100/300" part of the "Liability"
example referenced above, this coverage pays only for Bodily Injury
. . . NOT Property Damage. You would be able to collect from your
own insurance company what you would have been able to collect from
the other driver's insurance company for your Bodily Injury. The
numbers "100/300" represent the limits of what the insurance
company will pay to any one (1) insured ($100,000.00) or no more
than $300,000.00 in total to three (3) or more injured insured.
P.I.P. (Personal Injury Protection)
Personal Injury Protection pays for medical expenses and other basic
out-of-pocket expenses of the driver and/or passengers of a covered
vehicle that are injured as a result of an accident. This type of
insurance is required in states with No-Fault insurance laws. In
many other states it is offered as optional coverage.
UIM (Under Insured Motorist)
"UIM" stands for "Under Insured Motorist" Coverage.
Like "UM" coverage, this coverage will benefit the insured
if he/she sustains a bodily injury in an auto accident where the
other vehicle is at fault. If the other driver HAS insurance but
NOT ENOUGH insurance to pay you FULLY for the value of your Bodily
Injury Claim, the benefits of your UIM Coverage become available
to you. Your UIM Coverage will pay you the difference between what
your Bodily Injury Claim is FULLY worth and the policy limits you
collected from the other insurance company (up to your policy's
individual and/or aggregate coverage limits). If you sustained a
Bodily Injury in an auto accident and you collected from your own
UM coverage, you MAY be able to also collect under your UIM coverage
as well. This is referred to as "stacking". In some states
and dependent upon some policy verbiage, it may well be possible
to "stack" your benefits. To get answers that are more
"on-point" to your specific situation, we suggest you
talk with an insurance attorney local to you.
Medical Payments
The term "MED" as used in this example typically stands
for "Auto Med-Pay Coverage" and the dollar amount noted
reflects the maximum benefit amount collectable by any one (1) insured
for each covered accident. This coverage is designed to reimburse
an insured for treatment expenses incurred due to an auto-accident-related
injury (regardless of who may have been at fault in the accident).
Special note: Whether the Med-Pay coverage on your auto policy is
proprietary, surplus, subrogatable, limits the definition of "insured"
or has coverage limits relative to accident circumstance (vehicle
occupant vs. pedestrian) can vary from state to state and even insurance
company to insurance company. We recommend you clarify what Med-Pay
limits may apply to your coverage when you are buying your policy.
If your agent can't SHOW you the answer to your question . . . get
yourself another agent!
Collision Coverage
Collision Coverage is designed to protect your VEHICLE against loss
or damage from a collision. The "ACV- $500.00" part means
the most your insurance company will pay to you is the ACV (Actual
Cash Value) of your vehicle LESS $500.00. If the cost to repair
the covered damage to your vehicle is less than the ACV, your insurance
company will pay for the cost of repairs LESS $500.00. Collision
Coverage is typically based upon ACV limitations. However, some
insurance companies offer RCV (Replacement Cost Value) Collision
Coverage. This means the potential maximum benefit you may collect
under this coverage is increased to what it would cost to REPLACE
your existing vehicle . . . NEW! As the potential maximum benefit
is greater with RCV Coverage than with ACV, so is the premium higher
for RCV Coverage. Nonetheless, we wanted you to know that RCV coverage
is probably available to you. We go into greater detail about the
distinctions between RCV and ACV coverages in the How much will
be paid section of our Auto Insurance Claims page.
Comprehensive Coverage
Comprehensive Coverage is designed to protect your VEHICLE against
loss or damage from other than a collision (fire, theft, vandalism,
flood, glass breakage, etc.). The "ACV-$200.00" part means
the most your insurance company will pay to you is the ACV (Actual
Cash Value) of your vehicle LESS $200.00. If the cost to repair
the covered damage to your vehicle is less than the ACV, your insurance
company will pay for the cost of repairs LESS $200.00. Comprehensive
Coverage is typically based upon ACV limitations. However, RCV Coverage
is also available as described in the Collision Coverage paragraph
above. Most insurance companies will offer (for a slight add'l premium)
"0" deductible on Safety Glass Breakage. This means that
if your windshield is damaged, your Comprehensive Coverage will
replace the windshield at no cost to you. We recommend you consider
this optional coverage.
Towing
Towing Coverage is simply that. Your insurance company will reimburse
you (or accept direct billing) for the cost of towing the insured
vehicle from a place of breakdown to the nearest appropriate service
facility. Most insurance companies have a maximum limit they will
pay out on Towing Claims but some companies have virtually no maximum
limit, so check this out when you buy your policy. Most insurance
companies will only offer Towing and Rental Reimbursement Coverage
if the insured vehicle already has Collision and Comprehensive Coverage
with that same company.
Rental Reimbursement
If your insured vehicle is disabled because of a loss covered under
Collision or Comprehensive Coverage, Rental Reimbursement Coverage
will reimburse you for the cost of renting a temporary substitute
vehicle while your insured vehicle is out of service. This coverage
usually has a maximum $ limit per rental day, as well as a maximum
$ limit per loss occurrence. Daily and occurrence limits can vary
greatly from company to company. Be aware of these limits when you
buy your policy. We recommend you consider including this coverage
with your Auto Insurance Policy.
D.O.I. Surveys / Records
You should now have a basic understanding of Auto Insurance Policy
Coverages and should be better prepared to decide which coverages
you wish to have included in your Auto Insurance Policy. SUGGESTION:
Dig out your current Auto Insurance Policy and review it in light
of what you have learned here. You may have some deficiencies you
will want to address IMMEDIATELY!
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