The cost of insurance coverage for your vehicle can easily get out of control. To
help minimize expense, but still ensure you have proper vehicle insurance coverage
with respect to your needs and state insurance requirements, a close review of the
types and amounts of coverage available should be done in concert with your insurance
1. Protection for your vehicle covers damage to your vehicle. This coverage
is generally not required by regulation and is purely optional.
a. Collision coverage pays for damages to your vehicle caused by a collision or
rollover regardless of who caused the accident. It is important to remember that
the cost to repair your vehicle will be covered, less any deductible, only up to
the fair market value of the vehicle. So, if the cost to repair your vehicle is
80% or more of the fair market value of the vehicle, the insurance company will usually
claim the vehicle for salvage, and pay you the fair market value of the vehicle,
less your deductible, resulting in you having a check and no vehicle.
b. Comprehensive coverage pays for damage to your vehicle resulting from any accident
other than collision (or rollover), such as theft, fire, vandalism, flooding and
hail. This coverage is also not generally required by regulation. While you may
have a different deductible for comprehensive coverage than you do for collision
coverage, the cost to repair your vehicle (or replace your vehicle) will be handled
as described above under collision coverage.
c. The collision and comprehensive coverage noted above will usually cover you for
the same type of damage to rental cars that you rent. Check with your insurance
agent to see if this is the case. If so, except for any deductible you are responsible
for, you do not need to purchase the collision damage waiver (CDW) from the car rental
company to be protected. Also, if you charge your rental with a credit card, the
credit card company may also provide full coverage on rental cars, including the
payment of any deductible.
2. Liability protection protects you financially if you are found responsible
for an accident. Most states require a minimum amount of liability coverage, with
additional coverage amounts generally available at various higher levels. There
is generally no deductible and the policy will pay up to the limits of its coverage.
a. Bodily injury liability coverage provides protection if you are found legally
responsible for the injury or death of another person resulting from a vehicle accident.
b. Property damage liability coverage protects you if you are found legally responsible
for the damage to someone else's property resulting from a vehicle accident.
3. Bodily injury protection protects you and your passengers for costs related
to bodily injury in a vehicle accident. Many states require minimum coverage for
one or more forms of bodily injury protection, with additional coverage amounts generally
available at various higher levels. There is generally no deductible and the policy
will pay up to the limits of its coverage.
a. Personal injury protection coverage (PIP) pays for your medical expenses and
lost income, regardless of what driver is at fault.
b. Medical payments and extended benefits coverage covers medical expenses for you
and your passengers if injured in an accident, and provides income replacement and
disability benefits resulting from an accident.
c. Uninsured/underinsured motorist bodily injury coverage covers injuries to you
or your passengers resulting from an accident caused by an uninsured, underinsured
or hit-and-run motorist.