What follows is a simplified, plain-language description of the most common
categories of auto insurance coverage and how they may benefit you.
Bodily Injury Liability
If another person is injured because of your carelessness or the carelessness of
someone driving your car, this coverage typically requires your insurance
company to pay the claim. The company's obligation is limited, however, to the
amount of coverage you purchased. For example, if your liability limits are the
minimum of $25,000 per person and $50,000 per accident, your company will pay no
more than $25,000 to each injured person and no more than $50,000 total for any
one accident.
Property-Damage Liability
This is similar to bodily injury liability except that it covers damage to
another person's property rather than physical injuries. The company's
obligation to pay also is limited to the amount of coverage you buy.
Comprehensive
This category of protection generally requires your insurance company to pay for
damage to your car caused by something other than an auto accident (for example,
fire, theft or vandalism). The company's obligation to you will be limited by
the amount of any "deductible" you may have purchased. A $100
deductible means that you pay the first $100; the company pays the rest.
Collision
Your insurance company pays for damage to your car caused by an auto accident.
Deductibles also are common with this coverage.
Personal Injury Protection
Your company will pay the reasonable medical expenses of anyone in your car who
is injured in an accident. Under this coverage, it does not matter who was at
fault in the accident. You and most members of your household need not be in a
car for this coverage to apply. For example, you also would be covered if struck
by a car while you were a pedestrian. A portion of your lost earnings are also
covered by this type of insurance. As with liability insurance, the company's
obligation is limited to the amount of coverage you buy.
Uninsured Motorist
If an uninsured driver injures you or other occupants of your car, this coverage
will pay your claims for physical injuries. It serves as a substitute for the
bodily injury liability insurance that the other driver did not have. This
coverage also is limited to the amount of insurance you buy. As with personal
injury protection coverage, payment is not limited to automobile occupants.
Underinsured Motorist
If a driver injures you or your car's occupants, and his liability insurance is
insufficient to cover the full value of your claims for physical injuries, this
coverage will make up the difference. Again, your company's obligation is
limited to the amount of coverage you purchase. Like personal injury protection
and underinsured-motorist coverage, it is not limited to automobile occupants.
