What Does Car Insurance Cover?

If you’ve ever investigated the fine print on your insurance policy, you may have wished there was a simple answer to this question: What does car insurance cover? Unfortunately, that’s not possible. Consumers can choose between many policies, which cover a variety of circumstances. A close read of your policy, or a chat with your insurance agent, is the only way to find out for sure. But while the specifics of your policy are up to you, here’s what certain types of car insurance do—and don’t—cover.

What Car Insurance is Required?

Most states, but not all, require car owners to have some form of car insurance. States that do require it may require different amounts of coverage and different specific benefits. However, in order to be legal, most drivers must carry a minimum amount of:

  • Liability Coverage. Liability coverage is required by almost every state. It takes care of damage to other people, cars and objects that you may cause with your car. If someone sues you as a result of this damage, it can also help with your legal fees.
  • Personal Injury Protection (PIP) Coverage. PIP is required by some states, often those with “no-fault” laws. It provides coverage for medical expenses and, in some cases, lost wages if you or your passengers are injured in an accident.

Keep in mind that the amount of coverage states require may not be adequate to protect you and your assets. While it’s cheaper month-to-month to choose the minimum, it may not be the wisest choice if you’re in an accident.

Need More Coverage?

If you have a newer-model car, live in an area that’s prone to extreme weather, or have other concerns about your vehicle, you may be more comfortable opting for “full coverage”—that is, some level of collision and comprehensive insurance. Depending on your needs, you might want other coverage, too. Most companies offer the following, in addition to liability and PIP:

  • Collision Coverage. Collision coverage takes care of damage to your vehicle in the event that you’re at fault in an accident. If you’re not, the insurance of the person who was at fault should pay the bills (assuming they’re covered). Collision coverage also covers damage caused by colliding with another object, like a tree or fence, or from a rollover accident.
  • Comprehensive Coverage. Comprehensive coverage takes care of damage to your vehicle caused by a number of other catastrophic events, including inclement weather such as hail or wind, vandalism or theft, or hitting an animal.
  • Medical Payments Coverage. Medical payments coverage goes toward your medical bills or funeral expenses if you are hurt or killed in an accident. It typically has a low payment limit, but may cover the deductible on your standard health insurance.
  • Uninsured/Underinsured Motorist Coverage. If you’re in an accident caused by a driver without insurance, or with only the legal minimum, this coverage will step in and pay the medical and/or car repair bills that their insurance should have covered or isn’t adequate to cover.
  • Roadside Assistance. Also called Towing and Labor by some insurers, this pays for help if you’re locked out, run out of gas, or face one of a number of other similar and unexpected problems. You may not need it if you have supplemental coverage, such as an AAA membership.
  • Loan/Lease Pay-Off Coverage. This coverage can be useful for those who’ve financed or leased a car. If the amount you owe on a car is greater than its cash value, Loan/Lease Pay-Off coverage—or GAP coverage, a variant—will help with the difference if your car is totaled.

All of these coverages are subject to policy limits. As with liability and PIP coverage, make your decisions about how much you need based on the assets and people you have to protect.

What Other Types of Insurance Are There? 

Although the above insurance types cover a lot, there may still be gaps in your coverage, depending on your specific needs. Some companies also offer the following plans:

  • Rental Car Insurance. Most insurance companies offer some protection if you need a rental for a few days while your car is in the shop, but watch out for limits on coverage. Liberty Mutual provides policyholders an Unlimited Rental plan, as long as the damage is the result of an accident.
  • Sound-System Coverage. If you’ve made a serious investment in your car’s entertainment systems, it may not be covered by your comprehensive policy. Allstate provides add-ons to help you protect these purchases. Esurance offers a similar option called Customized Parts and Equipment Coverage.
  • Collector Car Insurance. Standard insurance plans typically aren’t tailored for the owners of classic and antique cars. State Farm and AARP/The Hartford both provide insurance specifically for these vehicles. They typically take into consideration that your car isn’t used for commuting and will appreciate over time.
  • Motorcycle Insurance. Almost all insurance companies offer coverage for recreational vehicles, like motorcycles, boats or ATVs—but they’re not covered by your auto insurance policy.
  • Umbrella Policies. Concerned about what would happen if your driving landed you in court? Companies including Allstate and Liberty Mutual provide additional liability protection in the form of umbrella policies. If the damage is covered under your regular insurance, umbrella policies kick in when liability limits are met.

If you’re already purchasing other insurance through the same company, one or more of these specialized policies should be relatively inexpensive, depending on the coverage you require.

What Isn’t Covered By Auto Insurance? 

It seems odd that, with all the insurance in the world, there are some things auto insurance just doesn’t cover. If your damage is related to the following circumstances, you’ll have to pay for it yourself:

  • Mechanical Breakdown or Routine Maintenance. If your car needs new brakes or an oil change, your insurance company definitely won’t pay for it. In some cases, dealerships will offer you a maintenance plan with the purchase of your new car, or you may qualify for a warranty.
  • Other Drivers. If you let your friend borrow your car, and they wreck it, they’re covered by your insurance plan. However, if that friend is your roommate, or someone else you live with, they’ll need to have their own plan or a rider on your policy.
  • Stolen Items. All of your car’s parts are covered by auto insurance, even if you have to get separate coverage for them, but items you leave inside aren’t. If your car is stolen while your laptop is in the trunk, make a claim on your homeowners’ or renters’ policy. Your auto insurance won’t pick up the tab.

It probably goes without saying, but nothing you do to your car intentionally is covered by insurance. The same goes for uses of your car that are illegal or that could foreseeably cause harm. That means you’ll be on the hook for any drag-racing damage.

Conclusion

So, what does auto insurance over? Quite a bit, or not very much, depending on what you’re willing to pay. If you’re already shelling out for a comprehensive policy, other add-ons, like rental or towing insurance, may not cost much more, but they can add up. If you’re still not sure how much protection you need, schedule a meeting with your insurance agent. They can analyze your circumstances and help pick the coverage that’s right for you.

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