The term ‘full’ coverage is thrown around constantly, but do you really know what’s covered? It’s necessary know the definitions of different coverage as this tells you exactly what your coverage protects, from liability and property damage policies to medical bills and GAP insurance. Some of these may be mandatory, others highly recommended and a few others would be value additions to your coverage. It is necessary to understand what each coverage entails. A more detailed explanation and examples of coverage can be found here.
Liability Coverage: It consists of two types of coverage, the Bodily Injury (BI) liability and Property Damage (PD) liability. In Bodily Injury liability, other people’s injuries or deaths, for which you are the cause, are covered. It also provides insurance in case the legal judgement goes against you in a serious accident case. It does not cover your injuries but the other party’s. Property damage liability encompasses all the damage caused by your car to other people’s property. Both these coverage provide you with legal defense in case the other party files a lawsuit. Having coverage is mandatory in most states.
Physical Damage Coverage: Comprehensive and collision coverage come under this category. Comprehensive coverage covers your vehicle and other vehicles in case of damage to them other than by collision, e.g., theft, damaged by flood, fire etc. The amount of repairs made depends on the deductible you choose to pay. Collision coverage covers your car when it hits or is hit by another car. It fixes the car for the full amount minus the deductible you choose.
Uninsured and Under-insured Motorist Coverage: Such coverage take care of covering bodily injuries that you, your household or your passengers sustain and property damages caused by uninsured or under-insured drivers when they’re at fault. It covers all the medical expenses up to the limit on your policy. In case of property damage, if you don’t have collision coverage, this coverage takes care of the repairs to a certain limit and if you do have collision coverage, the uninsured motorist insurance only pays the collision deductible. This applies to only certain states.
Other Coverage: There are a lot of other coverage such as the Personal Injury Protection Coverage, Basic and Additional Reparation Benefits, First Part Benefits (medical) etc. in the Personal Injury Protection coverage. The rate varies from State to State. Basic and Additional reparation benefits covers medical expenses to a certain extent and is usually a primary over health insurance. It is optional and cannot be combined with Medical Payments coverage. First Part Benefits-Medical also covers the medical expenses of the insured and the household involved in the accident, up to a certain limit.
Medical Payments Coverage: Protects the insured, the household involved in the accident and pedestrians, regardless of fault, to a specific limit. Work Loss helps regain lost wages. Gap insurance is optional for buyers who lease their cars and involves collision and comprehensive coverage. It protects you if your car is considered a total loss and helps you reimburse the amount difference in the actual value of car at the time of loss and the amount owed to the finance company. Accidental Medical Protection Plan covers you or your family (if covered under the policy) if the accident occurs in a private vehicle, and it covers this without any deductibles.
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