What does car insurance cover?
Car insurance is designed to provide financial protection for you and other drivers in the event of a car accident. The specific coverage offered by car insurance policies can vary, but typically includes the following:Liability Coverage
Liability coverage is the most basic type of car insurance coverage, and it is typically required by law in most states. It covers costs associated with damages or injuries you may cause to another driver or their property while operating your vehicle. |
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There are two types of liability coverage: bodily injury liability and property damage liability.
Bodily Injury Liability
This coverage pays for the medical expenses, lost wages, and other costs associated with injuries sustained by another driver or passengers in the event of an accident that you cause.Property Damage Liability
This coverage pays for damages to another driver's property, such as their vehicle, in the event of an accident that you cause.Collision Coverage
Collision coverage pays for the cost of repairs to your own vehicle in the event of a collision, regardless of who is at fault. If your car is deemed a total loss, collision coverage will pay the actual cash value of your car.Comprehensive Coverage
Comprehensive coverage pays for damages to your vehicle from events such as theft, fire, falling objects, natural disasters, and other non-collision incidents. This type of coverage will also pay for the actual cash value of your car if it is deemed a total loss.
Personal Injury Protection (PIP)
Personal Injury Protection (PIP) is also known as "no-fault" coverage. It covers medical expenses, lost wages, and other costs associated with injuries sustained in a car accident, regardless of who is at fault. Some states require PIP coverage, while others do not.Uninsured/Underinsured Motorist Coverage
Uninsured/Underinsured Motorist Coverage covers costs associated with an accident where the other driver does not have insurance or does not have enough insurance to cover the damages.This type of coverage can provide protection in the event of a hit-and-run accident or if you are involved in an accident with a driver who does not have enough insurance to cover the damages.
Additional Coverage Options
Some car insurance policies may also offer additional coverage options, such as rental car reimbursement, which covers the cost of a rental car while your car is being repaired after an accident. Roadside assistance coverage provides assistance in the event of a breakdown, such as jump-starting a dead battery or changing a flat tire.Gap insurance covers the difference between the actual cash value of your car and the amount you still owe on your car loan in the event of a total loss. It's important to understand that the specific coverage offered by a car insurance policy can vary based on the policyholder's individual needs and state requirements.
It's also important to understand that while car insurance can provide financial protection in the event of an accident, it does not guarantee that you will not experience financial losses.
What does car insurance not cover?
Car insurance policies can vary, but most exclude coverage for several types of events, including:Wear and tear
Regular maintenance and normal wear and tear of your vehicle are not covered by insurance. This includes things like tire wear, brake pad wear, and other routine maintenance items.Intentional acts
Insurance generally does not cover damage caused by intentional acts, such as vandalism or theft. You will not be covered if your vehicle is stolen or damaged due to someone's intentional act.Racing or illegal activities
Damages sustained while participating in a race or other illegal activities are not covered by insurance. This includes any activity that is against the law, such as street racing or reckless driving.
Improper maintenance
If your vehicle is damaged due to a lack of maintenance or improper maintenance, insurance may not cover it. For example, if you neglect to change your oil and your engine seizes as a result, your insurance company may deny the claim.Mechanical failure
Insurance generally does not cover damage resulting from mechanical failure or breakdown, unless it is the result of an accident. For example, if your transmission fails due to normal wear and tear, your insurance company will not cover the cost of repairs. |
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Floods, earthquakes, and other natural disasters:
Natural disasters are often not covered by standard car insurance policies, but can be covered under separate policies. This includes events such as hurricanes, earthquakes, and floods.
Natural disasters are often not covered by standard car insurance policies, but can be covered under separate policies. This includes events such as hurricanes, earthquakes, and floods.
Pets and animals
Damage caused by pets or animals is generally not covered by car insurance. For example, if your dog scratches the paint on your car, your insurance company will not cover the cost of repairs.Uninsured or underinsured drivers
If you are hit by an uninsured or underinsured driver, your insurance company may not cover all of the damages. In this case, you may need to use your own uninsured motorist coverage to pay for repairs and medical expenses.It's essential to understand what your car insurance policy covers and what it doesn't. Review your policy carefully and speak with your insurance agent if you have any questions.