When you buy an auto insurance policy,
you are buying a package of individual coverages. Each coverage protects you against
different types of losses. Once you understand the various coverages, you can
decide which ones to include in your personal insurance package. You can also
determine the limits of coverage you will need. The following are some common
coverages found in an auto policy. NOTE - Your policy
may not contain all of these coverages.
Injury (BI) Liability Coverage pays, up to the coverage limits, for damages
due to injury or death of others in a vehicle accident for which you or the operator
of your vehicle are legally responsible. It also pays your legal defense costs.
In most states this coverage is mandatory.
Damage (PD) Liability Coverage pays, up to the coverage limits, for another
individual's vehicle or property that has been damaged in an accident for which
you or the operator of your vehicle is legally responsible. In most states this
coverage is also mandatory.
Injury Protection (PIP) pays, up to the coverage limits, for reasonable
and necessary doctor, hospital and funeral expenses for you and your passengers
injured or killed in an accident, regardless of who is at fault. Payments are
usually limited to one to three years after the accident. This coverage is optional
in most states without no-fault insurance systems.
Motorists (UM/UIM) Coverage pays up to the coverage limits for pain and
suffering which is not covered by medical, disability and PIP. Underinsured motorist
coverage pays for bodily injury to you or your family resulting from the negligence
of someone whose liability insurance limits are insufficient. The definition of
an underinsured motorist varies from state to state.
Coverage pays, up to the coverage limits, for damage to your vehicle or
a vehicle you are operating caused by a collision or rollover. This coverage is
usually required if you have a vehicle loan.
Physical Damage Coverage pays, up to the coverage limits, for damage to
your vehicle or any vehicle in your custody resulting from theft, fire, vandalism,
flooding, hail or other perils (but not damage by collision
or overturning). It is usually required if you have a vehicle loan.
Reimbursement pays up to a specified amountfor rental vehicle charges while
your vehicle is being repaired for damage covered under your policy. If youprefer
not to incur the cost of renting a vehicle yourself and cannot be without a vehicle
while yours is being repaired, you might consider this coverage.
and Labor covers some costs incurred for services rendered at the place
of breakdown or for towing to a repair shop. It covers the delivery of gas, oil
or a battery, but not the cost of these items. If you lock the keys in the vehicle
or need a tire changed, this may also be covered. These services are often included
in auto club memberships, which can result in unnecessary duplicate coverage.