Understanding Your Auto Insurance Coverage
Auto insurance is an unavoidable necessity, especially since most U.S. states require mandatory coverage for licensed drivers. While you can't choose whether or not you'll have an auto insurance policy, you'll have some control over your coverage. A complete auto insurance policy offers several mandatory and optional coverage features, as mentioned below.
Nearly every auto insurance policy comes with liability coverage. This coverage takes care of any injuries incurred by the other driver in the event of an accident, as well as damage to the other party's property.
Most policies feature a certain amount of bodily injury liability coverage and property damage coverage. The minimum amount of coverage you'll need is usually mandated by your state. For instance, the state of New York requires its drivers to carry $25,000 of bodily injury liability coverage per person and $50,000 per accident. Property damage coverage limits are usually lower, with New York mandating its drivers carry $10,000 of coverage per accident.
Your state may also mandate other liability coverage options, including underinsured and uninsured motorist coverage. This coverage provides protection in circumstances where you're injured by someone who lacks insurance coverage or doesn't have enough liability coverage to handle the resulting damage or medical expenses.
Although you're not able to opt out of having liability coverage, you do have control over your liability limits beyond the state-mandated minimums. The higher your liability limits are, the more financial protection you'll have in the event of a serious auto accident.
Comprehensive and Collision Coverage
Unlike liability coverage, comprehensive and collision coverage are optional features for your insurance policy. Whereas liability coverage largely takes care of the other driver's damages and medical expenses, comprehensive and collision coverage allows your insurance provider to reimburse you for damages to your vehicle.
If your vehicle is vandalized, stolen, damaged by severe weather or your vehicle collides with a deer or any other animal, your comprehensive coverage will handle the repairs to your vehicle. If you're involved in a collision with another vehicle, on the other hand, you'll need your collision coverage to reimburse you for the damage done to your vehicle.
Carrying comprehensive and collision coverage makes sense when you have a brand-new vehicle or a vehicle whose repair costs are significant enough to discourage paying out-of-pocket. As your vehicle gets older and loses its value, however, the cost of carrying these coverage options may outweigh their benefits.
Other Optional Coverage
Your insurance company may offer other options you can add onto your auto insurance policy. These options include roadside assistance and rental reimbursement. The former provides emergency repair and towing services if your vehicle breaks down. If you're involved in an accident and need another vehicle while yours is being repaired, the latter takes care of the costs of renting a vehicle within applicable limits set by the insurer.