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Car Insurance Coverages in a Nutshell

Written by Michele Wilmonen. Posted in Research Last Updated: 02/22/2015

All of the important information you need about car insurance in one article.

car insurance

All the main car insurance coverages you need to know about in one quick article.

You may feel completely overwhelmed when you are trying to figure out what and how much car insurance you actually need on your vehicle. So to help you out, here is a quick guide with everything you need to know in less than 500 words.

Coverages

Liability coverage (mandatory in most states) – Covers the other person’s expenses when you’re at fault in and accident, it does not cover the people in your car.

Bodily Injury Liability (mandatory in most states) – Pays for the medical expenses of people injured in a crash in which you’re at fault. You’ll often see these policies with the numbers “20/50” policy or a “100/300” policy. These numbers describe the highest dollar amount the insurance company will pay for a single person’s injuries (the first number) and the maximum for all the injuries sustained by all the occupants of the other car (the second number). For example, a 20/50 policy will pay up to $20,000 for a single person’s injuries, and no more than $50,000 total for the injuries of everyone in the car you hit.

Property Damage Liability (mandatory in most states) – This pays for damage done the other property that you hit. Property liability is listed   as a third number in the string of liability numbers (20/50/10). The 20/50 is described above and the 10 is the $10,000 maximum that would be paid out on your behalf for the damages to the other property.

Personal Injury Protection (PIP) – Covers your and your passengers’ medical expenses from an accident.

Uninsured/Underinsured Motorist Coverage – Cover costs if you are hit by someone without insurance, or not enough coverage.

Collision – Pays for repairs to your car after an accident.

Comprehensive – Pays for damaged to your vehicle that is not from a collision (animal hits, theft, etc.)

How Much of These Above Coverage Should You Buy?

That depends on the state you live in and your financial situation. Every state has different car insurance laws which will determine what coverages you have to have and much you have to have of it.

Also you financial situation needs to be taken into account when you get insurance, because you don’t want a single car accident to put you in financial ruin,

The good news is that your local car insurance agent can help you determine exactly how much car insurance you need to be protected.

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Michele Wilmonen

Michele’s first introduction to insurance was working for a major insurance company as a file clerk and a mailroom supervisor in a regional office. She learned insurance directly from underwriters and claims adjusters from questions and also watching them do their job. Since then, she’s earned a number of insurance certifications from the Insurance Institute of America and also a Bachelor’s degree from the University of Idaho. She blogs at Car Insurance Guidebook.

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