All About Auto Policy Coverage

First, car insurance policies are designed to provide you with a level of protection against three distinct types of costs or damages if you are involved in an automobile accident: property, liability and medical.

  • Property coverage pays for damage to, or the theft of, your car.
  • Liability coverage pays for your legal responsibility to others for bodily injury or property damage sustained in an accident.
  • Medical coverage pays for the cost of treating injuries, rehabilitation, and sometimes lost wages and funeral expenses.

But that’s not all there is to consider, there are even more variables to look at when shopping around for vehicle insurance, including the types of liability coverage you may need, and whether your car requires collision and/or comprehensive coverage. 

Types of liability coverage

  • Bodily injury liability (BI): Bodily injury liability covers injuries that you, as the designated driver or policyholder, cause to someone else. It does not, however, cover the cost of damage to your vehicle, or to you or other people on your policy. It is mandatory in most states.
  • Property damage liability (PD): Property damage liability covers you or someone else who may be driving the car with your permission if the car damages someone else’s property. It also provides you with legal defense if another party files a lawsuit against you.
  • Medical payments (MP) or personal injury protection (PIP): This no-fault coverage provides medical expenses to you and any of your passengers who may have been injured in an accident.
  • Uninsured and underinsured motorist coverage (UM or UIM): This coverage will reimburse you if you are hit by an uninsured or hit-and-run driver, or when an at-fault driver has insufficient insurance to pay for your total loss.

Collision and comprehensive coverage

  • Collision insurance pays for damage to your car that is sustained when your car hits, or is hit by, another vehicle or other object. This coverage is not required by most states, but if you have leased or are financing the purchase of your vehicle, then the lien holder will require it.
  • Comprehensive coverage pays for damage sustained if your vehicle – and sometimes other vehicles you may be driving – for losses resulting from incidents other than collision. This coverage is not required by most states, but a lender may insist that you carry it until your loan is paid off.

Is my car properly insured?

This is a great question, and it’s one we can help answer. Generally, most states require car owners to purchase at least a minimum of bodily injury and property damage liability insurance, but often times, the rest is left up to your own discretion.

So, how do you determine whether you have the proper insurance for your vehicle? It is common to think that all auto policy coverages are the same and that all insurance companies offer similar packages. But before you buy into that idea, ask yourself these questions:

  • Do you know what type of auto coverage you should have?
  • When an accident happens, how is your company at handling claims?
  • Do you get the right advice and recommendations that help you save on your premium?
  • Can your insurance agent or company shop your renewal with five of the leading auto carriers if you are displeased with your insurance rate?
  • Is your insurance company financially stable in the New Jersey auto marketplace?

At Hanson & Ryan, we can help you check all of those boxes and more. If you are trying to make sense of your automobile coverage options and the limits that you need, let us provide you with a car insurance quote.