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Auto Insurance 101

Barlow & Bowen Insurance Center

With Auto Insurance there are several different types of coverage’s that can be purchased. I will briefly go over them here. Keep in mind, this is not meant to be anything other than a brief explanation and should be taken as such. Insurance policies vary in their coverage and you should always consult your policy to know which coverage may or may not exist.

Liability is required by most states. It offers protection to other people in the event that you cause them bodily injury and/or property damage. Liability has maximum limits on bodily injury (BI) and property damage (PD). It can be purchased in a split limit or a Combined Single Limit (CSL). With a split limit you have a max BI per person / max BI per accident / max PD per accident. With a combined single limit the maximum amount of coverage can be used for BI, PD, or a combination thereof.  In Georgia, our minimum state limits for split limits are 25,000 BI per person / 50,000 BI per accident / 25,000 PD per accident. For a CSL the minimum is 75,000. When choosing a limit of liability you should consider things such as being a homeowner, business owner and your net worth for adequate protection should you cause an accident.

Uninsured Motorist
Uninsured Motorist (UM) is probably one of the best coverage’s that you can buy. It offers you and your passenger’s protection against people that don’t have insurance on their vehicle; if they are at fault. It also gives coverage in the event that you become a victim of a hit & run. Limits of UM are the same as liability; it can be purchased as a split limit or a CSL. UM can have deductibles on the BI and the PD coverages. Generally it’s only the PD coverage that has one. UM is not mandatory and can be rejected. The description above is considered traditional UM. In Georgia we have a second option which is often called added on or in excess. The easiest way to understand it is to look at it as under-insured motorist. When this optional coverage is selected, it affords coverage in the event that the other at fault party doesn’t have enough insurance to cover the damages they caused. Then it will pay out up to the limits to cover the additional cost of BI or PD caused by them.

Medical Payments
Medical payments insurance will pay for medical expenses that occur as a result of an accident, regardless of fault. Medical payment coverage can be rejected, or purchased with a per person limit such as 500, 1,000, 2,000, 5,000, 10,000, 25,000 and 50,000. Some companies have other limits as well.

Collision insurance is coverage for physical damage to your vehicle in the case of an accident with another object such as another vehicle, a tree, light pole, building, etc. Collision insurance usually has a deductible that must be met before any payment is made by the Insurer.  For instance, if you have a $ 500.00 deductible, the Insurer will only pay for damages greater than $ 500.00. In the event you have $ 3000.00 in damages, the Insurer will pay $ 2,500.00.

Comprehensive Insurance covers you for physical damages other than collisions. Losses caused by fire, theft, vandalism, and acts of God. Things such as Hail damage, flood, falling objects and animal collisions usually fall under acts of God. Some companies define Comprehensive coverage as “other than collision”.

Towing is coverage that can be purchased to pay for towing bills. It usually applies to vehicles that are in a state of disablement due to accidents and mechanical breakdown. This can be paid directly by the Insurer or it can be on a reimbursement basis. Limits can vary from as little to $ 25.00 and some companies offer limits as high as $ 750.00, although this is rare. A typical limit is usually around $ 75.00.

Roadside Assistance
Roadside assistance coverage is an extension of Towing coverage. I has towing coverage as well as additional coverage’s in case you have a flat tire, run out of fuel or lock your keys in your car. Some can be used for mechanical reason such as broken fan belts, alternator replacement, etc. Some companies will pay for almost any thing that stops the vehicle from moving under its own power. So be sure to check these plans carefully.

This one is one that a lot of people misunderstand. The sole purpose of this coverage is to pay so much per day for a rental vehicle while yours is being repaired due to a collision that you were at fault in. If you weren’t at fault, the other person’s liability will afford you a rental car. Rental coverage has different limits and is purchased as an amount per day for so many days. The most common limit is $ 30.00 per day for up to 30 days. You may also see it as $ 30.00 per day with a max of $ 900.00. The amount per day and the number of days can vary considerably.

Accidental Death & Dismemberment
Accidental Death & Dismemberment (AD&D) coverage will pay a set dollar amount towards death or dismemberment due to an automobile accident. There are many different limits available.

Other Coverages
There are other coverage’s that I won’t go into such as replacement cost, stated value, limited comprehensive, etc, because these coverage aren’t that widely used.