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What Makes up an Auto Insurance Policy

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Most auto policies are comprised of a variety of coverages. The actual terminology, and the minimum required insurance will vary by state.

Sample Policy Coverage Example

Coverages Limits or Deductibles
Bodily Injury Liability
Each Person/Each Occurrence
$100,000/$300,000
Property Damage Liability $50,000
Uninsured Motorist
Each Person/Each Accident
Property Damage

$100,000/$300,000
$50,000/$250,000
Medical Payments (PIP) $2,500
Comprehensive $500 Ded.
Collision $500 Ded.

General Definitions

(Consult your insurance policy for terms and conditions applicable to you)

  1. Bodily Injury Liability covers injuries to someone else caused by the policyholder or driver (if different) of the insured car. Usually shown as two numbers, the first being per person, and the second for the entire accident.
  2. Property Damage Liability covers "injuries" to property caused by the policyholder or driver (if different) of the insured car. This is primarily damage to another car, but could also be to other physical property.
  3. Uninsured Motorist coverage will reimburse you if you are involved in a hit-and-run, or hit by an uninsured motorist. Like with liability, there can be a bodily and property component to the coverage.
  4. Medical Payments or Personal Injury Protection can pay for medical-related costs incurred by the policyholder or driver (if different), and others in the covered vehicle, or in other vehicles. This coverage can also assist if you get hit as a pedestrian. This is an optional coverage in some states, as the things it covers are sometimes already covered by a policyholder's health insurance.
  5. Collision covers you for damage to your car in an accident. This coverage comes with a deductible. A higher deductible will reduce your premium, although you are taking on the risk of more out-of-pocket expense should you have a claim. This is an optional coverage, although generally required if you have a car loan. As your car ages and decreases in value, some people choose to remove this coverage from their policy.
  6. Comprehensive covers you if the car is stolen, or if your car is involved in accidents not covered under collision, such as if your car strikes a deer. This coverage can also reimburse you for cracked windshields. Same issue as with collision regarding a deductible.