Insurance101
Car Insurance Basics
Types of Car Insurance Coverage
Policy documents
Claims Basics
Index Types of Car Insurance Coverage
Uninsured & Underinsured Motorist
Medical Payments Coverage
Liability Coverage
Comprehensive and Collision
GAB coverage
Rental Coverage
Liability Coverage
Liability insurance covers the damages to other people and property if you are found at fault in an accident. This means you don’t have to pay out of pocket for any hospital bills or automotive repairs if you cause an accident. It is the minimum amount of coverage required in most states across the country.
Property Damage
Bodily Injury
When you are at fault in an accident, property damage liability will cover the costs associated with destroying someone else’s property, whether that is their car or another form of their belongings. Like bodily injury liability, there is a maximum coverage limit for property damage liability insurance.
If you are considered at fault in an accident, bodily injury liability insurance covers the damages that other people in the accident incur. There are maximum coverage limits per person and per accident.
Medical Payments Coverage
Personal Injury Protection PIP
PIP covers medical expenses and lost wages for you and your passengers, no matter who causes the accident. PIP is required insurance in no-fault states and a minimum limit of coverage will be required.
BI vs PIP
The main difference between bodily injury (BI) insurance and personal injury protection (PIP) insurance is that the latter, PIP, provides coverage for injury to you and others involved in the accident, while BI protects against lawsuits made against you if you are responsible for an accident. Liability coverage is used when the insured is at fault for an accident and injures other people. MedPay helps with injuries to other people when they are passengers in the insured's vehicle, as well as the insured's own injuries.
This type of coverage pays for medical expenses that you or a family member incurred as the result of an automobile accident. It also covers people who are occupying an insured automobile. At the time the policy is issued, you will choose a coverage limit. The limits that you select are the most that will be paid for each person in connection with a single accident.
Uninsured & Underinsured Motorist
The uninsured motorist coverage will pay for your damages. Underinsured coverage is similar and usually pays for damages when the other party, who is at fault, does not have enough insurance to cover the cost.
Comprehensive Car Insurance
Comprehensive auto insurance is designed to help you pay for damages to your vehicle that aren’t caused by an accident, including theft, fire, storms, vandalism, or hitting an animal.
Collision Car Insurance
Collision insurance is designed to cover losses to your vehicle in the event it crashes into another object. You don’t need to collide with another vehicle to file a collision insurance claim. Depending on the situation, collision car insurance can cover damages from accidents with stationary objects or damage from losing control of your vehicle.
The value of your vehicle starts depreciating as soon as you drive it off the lot, especially for newer cars, and most cars will lose 20% of their value within the first year of leasing. If you get into an accident and total your car, a standard insurance policy will only cover the current market value of your car and not the full amount you owe on your loan.
GAB coverage
Gap insurance (guaranteed auto protection insurance) pays the difference between your vehicle’s value and how much you owe on it. If you owe more money on your financed vehicle than its current market price. Gap insurance, typically available on cars less than 5 years old, helps to pay the difference between the depreciated value of your vehicle and what you still owe on your car, subject to policy limits. Gap insurance covers your totaled car when it’s no longer usable. If you’re in an accident and your financed car is damaged beyond repair, gap insurance will cover the cost of what you owe. Gap insurance will also cover the cost of your vehicle if it’s stolen. Gap insurance only covers your car when it can’t be fixed. Therefore, gap insurance won’t cover you if your car gets in an accident and is still salvageable. Gap insurance only covers expenses related to your vehicle, so it doesn’t cover things like bodily injury and death. Lastly, gap insurance won’t cover your comprehensive or collision deductible.
Only drivers who are financing their vehicles are eligible for gap insurance. Gap insurance can be a worthy investment for drivers who owe more on their car than its current market value. If you want to learn if gap insurance is a good fit for you, simply approximate your car’s current value and subtract it from what you owe on your car
Rental coverage
Rental reimbursement coverage helps you pay for transportation expenses, such as a rental car or public transportation fare, while your own vehicle is being repaired after a covered insurance claim. It's typically an optional coverage on a car insurance policy, which means you need to add it to your policy and pay an extra amount for it and it depends on the other types of coverage you have on your car insurance policy. For example, collision and comprenhensive.
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Policy documents
Rental coverage does not cover
- Vacation car rented just for fun
- Additional car not registred on the policy
- Your car is being repair as result for routine maintenance work
- Your car is being repair as result for another circunstance than a covered loss
- Hospital bills
- Lost wages
- Health insurance deductibles
- Funeral costs
What is covered?
- Vehicle damage
- Vehicle theft
- Weather damage
- Property damage
What is not covered?
Liability coverage is required in every state except New Hampshire. But some drivers on the road are underinsured, or completely uninsured. If the policyholder is in an accident with someone who is underinsured or uninsured the policyholder's Uninsured and Underinsured Motorist coverage (UM/UIM) will kick in.
What does Liability Insurance not cover?
Liability coverage does not cover any damages to your body or to your car. Consider putting additional coverage on your insurance plan to cover any hospital costs or damages to your vehicle in the event of an accident.
What is liability-only coverage?
Liability-only insurance is the minimum coverage required by most state governments. It is the bare minimum dollar amount, with only liability coverage no additional coverage options on the plan.
Collision insurance may cover the cost of repairing your car in the event of an accident, it doesn’t cover everything that could happen. If a natural disaster (like a tornado or hurricane) causes parts of a roof, or even another car, to hit your vehicle and cause damages, collision coverage may not pay for repairs. The same is true for other incidents, including fires and falling objects.
Collision
Comprehensive car insurance covers many other unpredictable situations, including vandalism, civil disturbances or protests, theft, and natural disasters. The biggest advantage of comprehensive car insurance is that it covers multiple situations that you may not be able to afford out of pocket. For example, if a rock hits your windshield and cracks it, comprehensive insurance might cover the repairs.
Comprehensive
VS
How Does Comprehensive Car Insurance Work?
In most situations, your comprehensive car insurance could cover damages or losses as a result of:
- Natural disasters (such as tornadoes, hailstorms, or hurricanes)
- Theft from your vehicle
- Vandalism to your vehicle
- Falling objects that land on your vehicle
- Damage caused by animals
When you start a comprehensive car insurance claim, it’s important to determine the root cause of the damages
2. Insurance 101 | Types of Car Insurance Coverage
Gemma Maldonado Hernandez
Created on March 12, 2024
Types of Car Insurance Coverage
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Transcript
Insurance101
Car Insurance Basics
Types of Car Insurance Coverage
Policy documents
Claims Basics
Index Types of Car Insurance Coverage
Uninsured & Underinsured Motorist
Medical Payments Coverage
Liability Coverage
Comprehensive and Collision
GAB coverage
Rental Coverage
Liability Coverage
Liability insurance covers the damages to other people and property if you are found at fault in an accident. This means you don’t have to pay out of pocket for any hospital bills or automotive repairs if you cause an accident. It is the minimum amount of coverage required in most states across the country.
Property Damage
Bodily Injury
When you are at fault in an accident, property damage liability will cover the costs associated with destroying someone else’s property, whether that is their car or another form of their belongings. Like bodily injury liability, there is a maximum coverage limit for property damage liability insurance.
If you are considered at fault in an accident, bodily injury liability insurance covers the damages that other people in the accident incur. There are maximum coverage limits per person and per accident.
Medical Payments Coverage
Personal Injury Protection PIP
PIP covers medical expenses and lost wages for you and your passengers, no matter who causes the accident. PIP is required insurance in no-fault states and a minimum limit of coverage will be required.
BI vs PIP
The main difference between bodily injury (BI) insurance and personal injury protection (PIP) insurance is that the latter, PIP, provides coverage for injury to you and others involved in the accident, while BI protects against lawsuits made against you if you are responsible for an accident. Liability coverage is used when the insured is at fault for an accident and injures other people. MedPay helps with injuries to other people when they are passengers in the insured's vehicle, as well as the insured's own injuries.
This type of coverage pays for medical expenses that you or a family member incurred as the result of an automobile accident. It also covers people who are occupying an insured automobile. At the time the policy is issued, you will choose a coverage limit. The limits that you select are the most that will be paid for each person in connection with a single accident.
Uninsured & Underinsured Motorist
The uninsured motorist coverage will pay for your damages. Underinsured coverage is similar and usually pays for damages when the other party, who is at fault, does not have enough insurance to cover the cost.
Comprehensive Car Insurance
Comprehensive auto insurance is designed to help you pay for damages to your vehicle that aren’t caused by an accident, including theft, fire, storms, vandalism, or hitting an animal.
Collision Car Insurance
Collision insurance is designed to cover losses to your vehicle in the event it crashes into another object. You don’t need to collide with another vehicle to file a collision insurance claim. Depending on the situation, collision car insurance can cover damages from accidents with stationary objects or damage from losing control of your vehicle.
The value of your vehicle starts depreciating as soon as you drive it off the lot, especially for newer cars, and most cars will lose 20% of their value within the first year of leasing. If you get into an accident and total your car, a standard insurance policy will only cover the current market value of your car and not the full amount you owe on your loan.
GAB coverage
Gap insurance (guaranteed auto protection insurance) pays the difference between your vehicle’s value and how much you owe on it. If you owe more money on your financed vehicle than its current market price. Gap insurance, typically available on cars less than 5 years old, helps to pay the difference between the depreciated value of your vehicle and what you still owe on your car, subject to policy limits. Gap insurance covers your totaled car when it’s no longer usable. If you’re in an accident and your financed car is damaged beyond repair, gap insurance will cover the cost of what you owe. Gap insurance will also cover the cost of your vehicle if it’s stolen. Gap insurance only covers your car when it can’t be fixed. Therefore, gap insurance won’t cover you if your car gets in an accident and is still salvageable. Gap insurance only covers expenses related to your vehicle, so it doesn’t cover things like bodily injury and death. Lastly, gap insurance won’t cover your comprehensive or collision deductible.
Only drivers who are financing their vehicles are eligible for gap insurance. Gap insurance can be a worthy investment for drivers who owe more on their car than its current market value. If you want to learn if gap insurance is a good fit for you, simply approximate your car’s current value and subtract it from what you owe on your car
Rental coverage
Rental reimbursement coverage helps you pay for transportation expenses, such as a rental car or public transportation fare, while your own vehicle is being repaired after a covered insurance claim. It's typically an optional coverage on a car insurance policy, which means you need to add it to your policy and pay an extra amount for it and it depends on the other types of coverage you have on your car insurance policy. For example, collision and comprenhensive.
02
completed
here
Take your test
Be ready for the next module
Policy documents
Rental coverage does not cover
What is covered?
What is not covered?
Liability coverage is required in every state except New Hampshire. But some drivers on the road are underinsured, or completely uninsured. If the policyholder is in an accident with someone who is underinsured or uninsured the policyholder's Uninsured and Underinsured Motorist coverage (UM/UIM) will kick in.
What does Liability Insurance not cover?
Liability coverage does not cover any damages to your body or to your car. Consider putting additional coverage on your insurance plan to cover any hospital costs or damages to your vehicle in the event of an accident.
What is liability-only coverage?
Liability-only insurance is the minimum coverage required by most state governments. It is the bare minimum dollar amount, with only liability coverage no additional coverage options on the plan.
Collision insurance may cover the cost of repairing your car in the event of an accident, it doesn’t cover everything that could happen. If a natural disaster (like a tornado or hurricane) causes parts of a roof, or even another car, to hit your vehicle and cause damages, collision coverage may not pay for repairs. The same is true for other incidents, including fires and falling objects.
Collision
Comprehensive car insurance covers many other unpredictable situations, including vandalism, civil disturbances or protests, theft, and natural disasters. The biggest advantage of comprehensive car insurance is that it covers multiple situations that you may not be able to afford out of pocket. For example, if a rock hits your windshield and cracks it, comprehensive insurance might cover the repairs.
Comprehensive
VS
How Does Comprehensive Car Insurance Work?
In most situations, your comprehensive car insurance could cover damages or losses as a result of:
When you start a comprehensive car insurance claim, it’s important to determine the root cause of the damages