Car insurance is a financial shield for car owners, which protects them from all types of risks and damages. It is important to understand what car insurance covers and does not cover, in order to make an informed decision on your policy. In this article, we will explain the types of car insurance coverage available, common exclusions, and how to have the right coverage for your car.
Types of car insurance coverage
- Liability coverage: Liability coverage is mandatory in the majority of states and protects you financially if you injure someone or damage their property. It usually includes bodily injury liability and property damage liability. Bodily injury liability compensates for medical expenses and lost income to individuals injured and property damage liability compensates for repairing damaged property, such as another vehicle or fence.
- Collision coverage: Collision coverage is for the repair of your car due to collision with another vehicle, object, or even a pothole. Collision has a deductible and covers repair regardless of fault.
- Comprehensive coverage: Comprehensive coverage covers non-collision accidents such as theft, vandalism, fire, floods, and animal collisions. Comprehensive covers windshield damage as well and has a deductible.
- Uninsured/underinsured motorist coverage: This protection covers you in case of an accident with an uninsured or underinsured driver. It helps you to pay medical and car repair expenses.
- Personal Injury Protection (PIP) or medical payments coverage: PIP or medical payments coverage helps in payment of your and your passengers’ medical expenses regardless of the at-fault party. It can help to pay you lost wages and incidental expenses.
What car insurance doesn’t pay for
- Everyday wear and tear: Damage due to ordinary wear and tear, like tired brake pads or tyres56 is not covered under motor insurance.
- Mechanical failures: Failures due to mechanical or electrical malfunction are normally excluded unless they were caused by an insured incident like an accident.
- Personal belongings: Personal belongings stolen from your car are not insured under motor insurance. They will be covered by a house or tenants policy.
- Damage caused intentionally: Your car is not insured against deliberate damage by motor insurance.
- Business use: Business use of your car, for instance, ride-sharing, can be covered alongside an individual policy.
- Catastrophic events: While comprehensive cover does make provision for coverage of some natural disasters, specific cataclysmic events like earthquakes or accidents at nuclear power stations are excluded in regular policies.
How to know you have the right coverage
- Read your policy: Read your policy attentively so that you are aware of what’s covered and what’s not. Review exclusions and limitations.
- Think about supplemental coverage: If you use your car to drive for a job or drive for ride-sharing, think about adding commercial or rideshare coverage.
- Keep your policy up to date: When your circumstances change, such as moving to another state or purchasing a new car, update your policy so it still covers you.
Car insurance is cover against many risks, but equally important is that you are also aware of the cover and exclusions. Knowing what is covered and what isn’t puts you in the position to make decisions on your policy and that you are receiving the cover you require for your car. Always read your policy thoroughly and choose extra cover, if necessary, to needlessly incur financial loss.
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