Proper Auto Insurance Coverage Components

A proper auto insurance policy will include a number of elements. It should protect the driver from having to pay for damages caused in an accident through liability coverage, as well as the policyholder’s vehicle itself. The policy should also cover the policyholder, his or her family members and other people traveling in the vehicle.

Liability Auto Insurance Coverage

Liability insurance pays for personal injury and property damage claims made by the occupants of the other vehicle when an at-fault accident occurs. It also pays out a funeral benefit if the accident was a fatal one.

Physical Damage Auto Insurance Coverage

Physical damage auto insurance coverage includes collision and comprehensive protection. Collision coverage pays out when the damage is caused by striking another vehicle or an object. Collision insurance pays for losses due to other circumstances, including fire, theft, vandalism, falling objects, flooding and severe weather.

Uninsured and Underinsured Motorist Coverage

Even though most states require drivers to have auto insurance coverage in place, not everyone on the road complies with the law. Adding uninsured and underinsured motorist coverage to a policy is a good idea. The uninsured motorist insurance pays out when the at-fault driver in an accident doesn’t have any coverage in place or cannot be identified. Underinsured motorist insurance is used in situations where the at-fault driver has some coverage in place but the policy limit is not high enough to fully cover the damages caused in the accident.