Auto Insurance Basics: Additional Coverage

When you start to consider the various types of auto insurance coverage available it can get overwhelming. While basic, legally mandated auto insurance covers the cost of damages to other vehicles that you cause while driving, it does not always cover damage to your own car or all of your potential medical bills. To cover this, you need to purchase the following optional auto insurance coverages in addition to the standard benefits described in our last blog post.

Medical Payments

Medical Payments coverage is optional. It covers reasonable and necessary medical expenses and funeral expenses incurred as a result of bodily injury from an auto accident, not covered by PIP and up to the limit chosen. Medical Payments coverage applies to the named insured, resident relatives and others while a passenger in your insured vehicle. Also, Medical Payments coverage follows you and your resident relatives in any car or as a pedestrian or bicyclist. Some people purchase Medical Payments coverage to pay the percent of medical expenses not covered under basic PIP or to pay the PIP deductible, if one was chosen.

Comprehensive Coverage

This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object. Comprehensive provides coverage for damage to your insured vehicle from fire, theft, windstorm, vandalism, flood, falling objects or from colliding with an animal. It will also pay to repair your windshield if it is cracked or shattered. This coverage is usually available even if you elect not to purchase Collision coverage. Common deductible amounts are $250, $500 or $1,000. You should consult your agent or insurance company to determine what deductibles are available to you.

Collision

Collision coverage pays for the repair or actual cash value of your insured vehicle if it collides with another vehicle, flips over or collides with another object (except animals). Common deductibles are $250, $500 and $1000 and insurance companies normally require the purchase of Comprehensive/Other than Collision coverage in order to purchase Collision coverage. In general, only equipment that is permanently attached to your vehicle is considered for coverage in a Collision claim.

Rental Reimbursement

Rental Reimbursement is another optional coverage. Normally, this coverage is only available if you purchased Comprehensive and Collision. Rental Reimbursement provides coverage for the cost of renting a replacement vehicle in certain situations. In the event of a covered loss, your insurance company will reimburse you for car rental expenses up to the limits specified in your policy. Your insurance company is not responsible for rental reimbursement unless there is a covered claim that triggers the need for a rental car.

While some insurance companies may pay for your rental car in advance, eliminating the need for you to initially pay out of pocket, they are not required by law to do so. In fact, most contracts state that the insured must pay for the car rental in full and then submit the receipts to the insurance company for reimbursement.

Towing and Labor

Towing and Labor is optional and provides coverage for emergency road service (at the scene) and towing up to the limits shown on the policy. However, it is important to remember that frequent towing claims can affect your coverage in a negative way. Insurance companies have the right to cancel your policy for too many claims, even if they are low dollar towing claims not associated with an accident. Some policies settle towing claims on a reimbursement basis and others have contracts with preferred towing companies to provide the service.