When you think about car insurance, you likely recall a couple key phrases. These phrases probably include a generous helping of catchy jingles, along with some insurance product types like “comprehensive” and “collision.”
Understanding your car insurance is a vital part of protecting your assets. Unfortunately, surveys of American car owners show a wide range of misconceptions and a general misunderstanding of insurance products.
In this blog, we list six of the most common car insurance types. You may hear about these coverages in ads and in conversations with your agent; you also may be required by law to have them.
1. Liability
Liability coverage comes in two forms: bodily injury liability and property damage. If you are involved in an accident where you are at fault, your liability policy covers the cost for the other driver’s bodily injuries and property damage.
Typically, the only insurance required by all vehicle owners in a state is liability coverage. In Illinois, for your personal or family vehicles, you must have the following:
- $25,000 coverage in the case of injury or death of one person in an at-fault accident
- $50,000 coverage in the case of injury or death of two or more people in an at-fault accident
- $20,000 coverage in the case of damage to another person’s property
You may decide to expand your liability policies because you must cover any expenses incurred that are higher than the insurance payout.
2. Uninsured Motorist Bodily Injury Liability (UMBI)
While virtually every state requires a minimum limit of liability coverage, not all drivers follow the law. If you are involved in an accident with an at fault uninsured motorist, UMBI coverage will apply.
Illinois state law requires that you carry the same UMBI limits as your basic liability coverage.
3. Medical Payments
This optional coverage gives you a little extra protection against the high cost of health care following an accident. It can help pay for medical expenses if you, another driver named on your policy or your passenger(s) are injured in an accident.
4. Uninsured Motorist Property Damage (UMPD)
This another optional coverage designed to pay for damages to your vehicle in the event that you are involved in an accident with an uninsured motorist. IF you do not have physical damage coverage, you can add UMPD as a valuable alternative.
5. Physical Damage Coverage
This coverage protects your vehicle and comes in two forms: Comprehensive and Collision.
- Comprehensive covers your vehicle from a loss other than collision; to name a few: fire, theft, vandalism, and malicious mischief.
- Collision covers your vehicle for an accident involving your vehicle and whatever it collides with: another car, a stationary object, etc.
Typically, both forms of physical damage coverage come with a deductible which you pay before the company pays. If you are paying a car note, physical damage coverage is a requirement of your lien holder.
6. Towing and Rental
Two more optional coverage options can be added to your policy. At Great Northern, we can offer you towing PLUS roadside assistance which will give you a tow, fix a flat tire, or even bring you gas or come help when you lock yourself out of your car.
Rental reimbursement coverage provides an allowance of up to so much per day for so many days while your vehicle is in the shop being repaired as a result of a covered loss.
If you use your car for business, contract driving, or other nontraditional uses, the law may require other types or amounts of coverage in addition to these. If you don’t feel sure which insurance you need or which insurance best protects you, consult with a trained insurance representative from a reputable agency.
This professional can help you determine which of the above coverage options (and any others) you may need before you get on the road.
Remember, once you purchase a policy, you must keep your insurance card or other proof of insurance inside your vehicle during operation.
