Most Common Auto Insurance Coverages with Explanation and Benefits
Bodily Injury Liability
If another person is injured because of your carelessness or the carelessness of someone driving your car, this coverage typically requires your insurance company to pay the claim. The company’s obligation is limited, however, to the amount of coverage you purchased. For example, if your liability amounts are the North Carolina minimum of $30,000 per person and $60,000 per accident, your company will pay no more than $30,000 to each injured person and no more than $60,000 total for any one accident. You will be personally responsible for any damages above the amount of your insurance coverage. You may see shorthand references to liability insurance limits as 30/60, 50/100, or 100/300.
This is similar to bodily injury liability except that it covers damage to another person’s property rather than physical injuries. The company’s obligation to pay also is limited to the amount of coverage you buy. The minimum limit for property damage coverage in North Carolina is $25,000. So shorthand references to liability and property damage coverage combined may be written as 30/60/25. Of course, $25,000 doesn’t come close to repairing a badly damaged new vehicle these days, so we always recommend that our clients purchase additional coverage. It’s surprisingly inexpensive to increase your liability coverage above the minimum required by law.
This category of protection generally requires your insurance company to pay for damage to your car caused by something other than an auto accident (for example, fire, theft or vandalism). The company’s obligation to you will be limited by the amount of any “deductible” you may have purchased. A $100 deductible means that you pay the first $100; the company pays the rest.
Your insurance company pays for damage to your car caused by an auto accident. Deductibles also are common with this coverage.
Medical Payments Coverage
Your insurance company will pay the reasonable medical expenses of anyone in your car who is injured in an accident. Under this coverage, it does not matter who was at fault in the collision. You and most members of your household need not be in a car for this coverage to apply. For example, you also would be covered if struck by a car while you were a pedestrian. A portion of your lost earnings are also covered by this type of insurance. As with liability insurance, the company’s obligation is limited to the amount of coverage you buy. Medical Payments coverage is available in North Carolina in amounts of $500 and up to $100,000. This coverage is not mandatory.
If a driver injures you or your car’s occupants, and his or her liability insurance is insufficient to cover the full value of your claims for physical injuries, this coverage will pay your claims for physical injuries. It serves as a substitute for the bodily injury liability insurance that the other driver did not have. This coverage also is limited to the amount of insurance you buy. As with personal injury protection coverage, payment is not limited to automobile occupants.
If a driver injures you or your car’s occupants, and has no liability insurance to cover your claims for physical injuries, this coverage will take care of your claims. Again, your company’s obligation is limited to the amount of coverage you purchase. Like personal injury protection and underinsured-motorist coverage, it is not limited to automobile occupants.