What is covered by a basic auto insurance policy?
A basic auto insurance policy must cover at least six points and in the interest of the policy holder, each coverage is priced separately for better understanding.
1. Liability arising from bodily injury
This bodily injury liability coverage holds good for the driver or the policy holder who inflicts injury to someone and the coverage also applies to all the family members listed on the policy provided the car or any automobile is taken and driven with the consent of its rightful owner. It is always a better practice to have more than the minimum liability insurance specified by different states. This comes in handy when you are involved in a very serious accident, wherein you are likely to be sued for a larger sum and your chances of depleting the permanent assets like home and other savings are high.
2. Personal Injury Protection (PIP) or Medical payments (MP)
As the name suggests, this coverage provide funds for the treatment of injuries suffered by the driver and other occupants of the policy holder’s car or automobile.
PIP in its broadest meaning can also be taken to cover the medical payments along with the lost wages and the cost involved in replacing the normally performed services of the injured during the accident. Sometimes the PIP may also pay for funeral charges.
3. Liability to property damage
The liability to pay for the damage caused by the driver of your car or anyone who drives the car with your permission is another important criterion any basic policy shall cover. The coverage includes payment for the damage to the car as well as the damage inflicted on someone’s auto / car, other permanent structures like buildings, fences, lamp or telephone poles etc.
Collision coverage will pay you to set right the damage caused by colliding with another car or as a sequel to flipping over. It may be surprising but it also covers the damage due to pot holes. Generally the collision coverage comes with a deductible ranging between $250 and $500 and sometimes up to $1000. The catch point in this is higher the deductible, lower the premium.
The good point is that even if you are at fault for the accident and consequent damage, the collision coverage will take care of the reimbursement charges for the repair of your car minus the deductible; if you are not at fault for the accident, your insurance company will recover the charges from the other person’s insurance company (who is at fault) and sometimes the deductible also, when successful.
5. Comprehensive coverage
This comprehensive auto coverage differs from collision coverage by reimbursing you the loss suffered due to theft or damage arising from reasons other than collision like fire, flood, hailstorm, hurricane, riot, vandalism, falling large objects or contact with animals or birds etc. The price you have to pay for this comprehensive coverage may range from $100 to $300 depending on the state and as usual, higher the deductible lower will be the premium. The comprehensive coverage will also pay for the damage caused by cracked or shattered windshield.
6. Underinsured or uninsured motorist coverage
This coverage will pay for the damage suffered by you or an authorized driver or any of your family members at the hands of an uninsured or hit-and-run driver. The underinsured motorist coverage comes in handy when the driver involved in an accident has insufficient coverage to fund for the total loss. This coverage will also be in force when you are hit as a pedestrian.