Auto Insurance Cover – The Facts

When it comes to auto insurance, many people are easily confused by the different types of coverage available. To help you understand these coverage types better, they are listed below with definitions and explanations for your benefit.

Liability Cover – Liability coverage is the minimum auto insurance covered required by law in most states. It is intended to cover the victims of an auto accident that is deemed to have been caused by you. Your own bodily injuries or property damage is not usually covered by liability insurance.

Comprehensive Coverage – Comprehensive coverage is intended to cover damage to (or the loss of) the insured vehicle resulting from causes other than collision such as storm damage, theft, vandalism and fire.

Collision Coverage. Collision coverage is intended to cover losses to your car when you are involved in a collision with another car or with a stationery object.

Uninsured/Underinsured Cover – Uninsured motorist cover is available for protection if you are involved in a traffic accident with a driver who is either uninsured or underinsured.

GAP Coverage – We all know that there is a sharp decline in the value of a car immediately after purchase. This means that any loan you took out to finance the purchase of the vehicle could be many thousands of dollars greater than the amount your auto insurance company would pay out if your car was stolen or became a total loss following an accident. Gap cover or loan/lease cover as it is also known is intended to bridge that gap in valuation and the amount you owe on the loan.

PIP Personal Injury Protection – PIP (also known as no-fault), covers medical and funeral expenses and lost wages of the driver and passengers in the insured vehicle no matter who caused the accident.

Pay-Per-Mile/Pay-As-You-Drive. Unlike the usual type of auto insurance policies that charge a flat rate based on time periods, Pay-Per-Mile coverage is based entirely on the distance driven. The distance is measured via a tracking device that the auto insurance company fits to your car.

In the end, getting the best premium and coverage that fits your budget is a balancing act.

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