Your policy is a contract that
specifies what your policy covers.
Most policies include:
- Liability ►
- Collision/Comprehensive ►
- Medical Coverage ►
with different coverage limits and/or
deductibles for each.
PARTY: The policyholder is the first
party, the insurance company the
second party and anyone else in a
claim is a third party.
COVERAGE PERIOD is the time period that
your policy is in force.
DRIVER(S) AND VEHICLE(S) COVERED lists
the drivers and vehicle(s) covered by the policy.
PREMIUM is the total cost for all vehicles
covered by the policy.
COVERAGE describes each vehicle and
the coverage for that vehicle.
COVERAGE LIMITS are the maximum amount
your insurance company will pay for each type of coverage.
DEDUCTIBLES are how much you will
pay out-of-pocket for each covered claim.
LIABILITY INSURANCE protects you financially if
you are at fault in an accident, it typically covers
damage to others, like repairs and medical expenses,
up to the policy limits.
Most states require a minimum amount of liability
insurance coverage, usually described like “25/50/15”
25 - Up to $25,000 per person for bodily injury
50 - Up to a total of $50,000
15 - Limited to $15,000 for property damage
Expenses that exceed the policy limits of the
“at fault” driver may be their responsibility, so you
may be responsible for what your policy doesn’t cover.
Additional coverage is usually available from your
COLLISION covers damage to your car (up to the
actual value of your vehicle, minus your deductible)
from a collision with another vehicle or object,
regardless of who was at fault. May include collision
with a tree, pothole, and garage door or if your car rolls
over. Damage to objects the car collides with is
covered by property damage liability insurance.
COMPREHENSIVE covers events other than a
collision, like fire, theft, hail, flood, earthquakes,
UNINSURED MOTORIST covers an accident with
a motorist who is uninsured (illegal in most states),
underinsured (they are at fault and their liability
insurance doesn't cover your loss), and damage
by a hit-and-run driver.
MEDICAL COVERAGE and Personal Injury Protection (PIP) is coverage in which your own insurance company pays for your medical costs, lost wages, loss of essential services normally provided by the injured person (i.e. childcare, housekeeping), and funeral costs.
It may also cover your passengers and/or other types
of expenses. It is often associated with a no-fault
system. Specific coverage and PIP payments vary
widely from state to state.