If you own an automobile, your insurance company will send you a policy and premium notice when it’s time to renew.
You’ll see a page detailing your insurance coverage for every car you list on the policy. You’ll see terms such as “liability coverage,” “collision,” “other than collision/comprehensive,” “bodily injury” and “uninsured/underinsured coverage.”
Most people don’t use these words every day. I thought it would be good to review what they mean so you’ll have a better understanding of your automobile insurance coverage.
The most vital part of your automobile insurance coverage is for liability insurance. State law requires all vehicles operating on North Carolina roads – and roads in most other states – to have liability coverage.
Liability coverage protects you in case you are at fault in an automobile crash that causes damage to someone else’s car or property (property damage liability coverage) or injures someone (bodily injury liability coverage).
State law requires that motorists maintain a minimum 50/100/50 liability coverage. That means if you are at fault in an accident, your insurance would pay up to $50,000 to any one person for an injury, up to $100,000 for all injured persons and up to $50,000 for property damage.
Many insurance agents recommend that you have even higher liability coverage. It may cost more, but with the costs of automobiles and medical care these days, having higher limits could protect you in the long run.
State law also requires motorists to have uninsured and underinsured motorist coverage. Uninsured motorist coverage covers injuries to you and your passengers as well as damage to your car if an uninsured driver hits you. Underinsured motorist coverage pays injury claims when an at-fault driver does not have enough insurance to fully pay for your loss.
Full coverage includes collision coverage and comprehensive coverage. Collision coverage pays for damage to your car from a collision with another car, or when your car hits an object (such as a tree or a sign), a pothole or flips over.
Comprehensive coverage, sometimes called other-than-collision coverage, pays for damage to your car that is not caused by a collision. This includes theft or vandalism, weather damage, flood, fire or impact with an animal. Comprehensive coverage will also pay to repair or replace your windshield if it gets cracked by gravel striking it.
If you have a loan on your car, your lender will likely require you to have full coverage.
Collision and comprehensive coverage will come with deductibles, or the amount of money you’ll pay up front if your car is damaged before the insurance company starts paying.
You can lower your premium with a higher deductible, especially for collision coverage. There is no one-size-fits-all rule here. Discuss with your insurance agent what you think you can afford to pay up front when determining your collision deductible.
Some other types of automobile insurance you may wish to discuss with your agent include GAP (guaranteed auto protection) insurance, which could help you if the amount you owe on your car is more than it is worth and your car is damaged; rental insurance, which covers the cost of renting a car while your own vehicle is in the shop undergoing repairs; and roadside or towing coverage, which reimburses you for your costs if your car is disabled.
If you’re still having trouble making sense of your automobile insurance coverage, you may call a consumer specialist at the Department of Insurance weekdays from 8 a.m. to 5 p.m. at 855-408-1212. Or you may visit www.ncdoi.gov.
