Auto insurance covers you, your passengers and the other party in case of an accident. It can be broken down into 4 parts as follows. The liability part of the insurance covers bodily injury (BI) and property damage (PD) of the other party if you are at fault. Medical payments (med pay) pay for bodily injury of you and your passengers regardless of who is at fault. Uninsured motorist (UM) and under-insured motorist (UIM) covers you and your car. Comprehensive and collision cover your car.
Like all insurance, the higher/lower the deductibles of these coverage are, the lower/higher the premiums are. There is no deductibles for liability coverage. The deductible applies when your insurance company is paying for your loss. At-fault accidents will lower your ‘insurance scores’ and result in ‘surcharge’/increase in your premium. ‘accident forgiveness’ (offered by some insurers) is used to prevent this from happening. However, if you are found liable too often, your ‘insurance score’ will take a hit. If your insurance score is too low (meaning you present a very high risk), you will have to find some kind of ‘non-traditional’ insurance because many insurers are not willing to take the risk.
Liability Coverage
Liability coverage is required by law. However, the limits depend on the state. In Georgia, minimum liability insurance required by law is 25k/50k/25k where the 3 numbers refer to BI per person, BI per accident, and PD respectively. You can increase the coverage by paying a higher premium. UM limits are usually the same as these limits by default, which can be changed depending on your state/location. For example, in Georgia, both med pay and UM/UIM are not required.
What happens if you cause an accident that results in damages exceeding the limits? You can get sued, lose a judgement, and have to pay for the rest of the damages. The potential of the responsibility can be daunting. So you might want to consider having coverage that’s more than the minimum requirements. To get even better coverage, one can get an umbrella policy which pays after the liability limits have been reached, up to your chosen policy limit.
An important thing to know is that Auto policies usually follow the car, not the person (named insured). For example, if a friend borrows your car and get into an accident, your policy will be the primary payer before your friend’s policy will pay.
Comprehensive & Collision
Comprehensive insurance covers the replacement or repair your vehicle if it’s stolen or damaged in an incident that’s not a collision. It typically covers damage from fire, vandalism or falling objects (like a tree), natural disasters, and collision with animals.
Collision coverage helps pay to repair or replace your vehicle if it’s damaged or destroyed in an accident with another car, regardless of who is at fault. Collision also covers damages caused by potholes, and rollover. If the other party is at fault for the collision, his/her insurance company will cover the collision damage. If he/she is uninsured, your UM coverage will kick in.
Miscellaneous
If you drive for a rideshare company such as uber or Lyft, you can get “gap” coverage. Your regular auto insurance covers you when your uber/Lyft app is offline. You are covered by uber/Lyft when you are executing a ride request. When your app is idling/waiting online is when you need a “gap” coverage which is offered by your insurance company for additional premium.
Auto insurance normally does not cover personal properties in your vehicle. Personal property on your vehicle can be covered with renter’s insurance, or homeowner’s insurance. You can often get discounts if you get renter’s insurance (or homeowner’s insurance) along with your auto insurance.
Personal auto insurance usually also covers the use of your vehicle in personal business as long as you are not compensated for transporting people or cargo, and the vehicle is not driven by employees.