You just received your brand new evidence of insurance cards and a copy of your auto policy in the mail. Now, you’re wondering what the heck all those coverages mean.
Typically, when it comes to auto insurance you have two choices of coverage packages; liability and full coverage.
Liability insurance consists of two types of coverages, those that cover others if an accident is your fault and those that cover you and your passengers. Whereas, full coverage insures your vehicle.
Here is a simple breakdown of liability insurance (for a more in depth definition guide, go to: https://www.longmontbrokers.com/glossary/a/ )
Bodily Injury Liability – this is the coverage you do not want to skimp on. Bodily injury is required by law if you own a vehicle and it covers the cost of damages to the other party. It will also cover the cost of a lawsuit if your vehicle causes another person’s injury or death.
Property Damage Liability - if you damage someone else’s property with your vehicle, your coverage will pay up to the full amount of your selected coverage.
Many of my clients ask what I recommend for Property Damage coverage. I tell them, in the state of Colorado, the required liability limit is $25,000 per person, $50,000 per incident and $15,000 for personal property. My advise is to NEVER go with the state minimum requirements. Most new vehicles cruising down the street cost $25,000 to $60,000. The state minimum doesn’t cover enough. If you own a home, the very least I recommend is 100/300/50, because your home will be the very first target an attorney will go after should your insurance money run out.
Now for the coverages that cover you and your passengers:
Medical Payments Coverage covers medical expenses (deductibles, ambulance rides, stitches…) you or any of your passengers need due to injuries resulting from an accident involving your vehicle. It doesn’t matter if the accident was your fault, it covers you if you are a pedestrian and are hit by another vehicle, or any other type of accident involving the covered vehicle. We had a client whose medical payments covered his dental work when he fell onto his car and knocked out a few teeth.
Uninsured Motorists Bodily Injury coverage protects you in the case that the other party is legally responsible and does not have insurance, or if you are hit by a hit-and-run driver. FYI, it’s not that unlikely either of those possibilities could occur. A 2017 study by the Insurance Research Council claims that 13.3% of Colorado drivers are uninsured. That means, a little more than 1 out of every 10 Colorado drivers is does not have insurance. Yikes!
Uninsured Property Damage is not widely utilized by insureds, but absolutely should be if one does not carry full coverage. UP/BI coverage costs very little and will help cover costs of your vehicle should you be hit by an uninsured driver. We’ve seen this coverage save several of our client’s booties at a time of loss. If you’re going to go with liability only, be smart and insist on the UP/BI coverage.
Now for full coverage.
Comprehensive covers you for the acts of God: hail, wind, snow, lightning, falling boulders...and, the ever present Colorado deer. Yep, because a deer may actually run into you, your Comprehensive coverage will kick in if that sucker damages your car. Your Glass Replacement coverage falls under your Comprehensive coverage.
Glass Replacement pays for repairs (filling stars in your windshield) or the replacement of glass on your vehicle. Most companies require a small deductible of $50-$100.
Collision is pretty self explanatory. If you collide with it, your collision coverage covers damages to your vehicle.
Extended Transportation is also known a rental car coverage. Coverages are written as split limits like, 30/900 which mean you may rent a car for $30 a day up to $900.
With most companies, Road Side Assistance covers:
Jump starts
Fuel delivery
Flat tire change
Lockout assistance
Roadside winching
If you need a tow, be sure to check how many miles you're covered for. I've seen policies cover 15 miles, 100 miles and some are unlimited.
Insurance terms can feel like a foreign language. Knowing what your coverages mean is important because it helps you to know you are properly insured. Should you have any questions, feel free to reach out and ask. https://www.longmontbrokers.com/
Article written by Shauna Cox