What Does Car Insurance Cover In Accidents?

Know everything about car insurance coverage, including rates.

So you met with an accident.

Not only did you damage your car but also someone else’s vehicle or property. And maybe there were some injuries too. Maybe you were at fault, maybe you weren’t.

If you don’t have auto insurance, be prepared to pay a hefty sum in compensation, and you may also be charged for driving it illegally. Many states don’t let you drive a yard without insurance, so if you’re caught without insurance, you could also face legal consequences and your license could be confiscated by the state.

But if you do have insurance, maybe just let the insurance company handle it. How?

How does Car Insurance work?

A car insurance policy provides coverage to expenses if they arise from a road accident. Whatever coverage amount you set while buying the policy will be divided over the course of years and you will be required to pay a premium.

Car insurance is usually given on the basis of personal questions and driving history; if you’re a clean driver with no road violations or DUI, chances are you will be given a good auto insurance plan and that too on low premiums. General questions include expected mileage a day, how many years of driving experience you have and whether previous auto insurance policy has lapsed.

All of these questions will give you quotes on the best auto insurance plan that you should choose and then you will have to pay premiums monthly or annually to keep the policy in force. Now the important question is as to what it covers.

What is covered in Car Insurance?

Whether it was your fault or not, the accident happened.

And you’re at a loss. Your vehicle got damaged and so did someone else’s. If you have auto insurance, there are a couple of scenarios that will be covered under the policy.

  • Liability: Any damage that you’ve caused to someone else’s vehicle and property and they demand that you pay for expenses. This will also cover third party medical expenses if someone is injured in the accident because of you.
  • Personal damages: Any medical expenses and repair expenses that you and your car faces will be covered by the insurance company.
  • Legal: If a third party sues you for destroying their property or assets while in the accident, you will also be covered to go through the legal process and even hire a lawyer.
  • Theft or vandalism: If someone else steals or damages your car and you’re in for paying a hefty amount, you will be covered under the auto insurance policy.

What is NOT covered in auto insurance?

There are also certain exceptions to car insurance; certain things that are not covered in an auto insurance policy such as:

  • Loss of personal belongings: Let’s say if someone steals your laptop from your car, or some other important asset, that loss will not be covered under your auto insurance policy.
  • Other people driving your car: If only you’re insured under one policy, expenses that come from you driving the car will be covered- not if your spouse or a friend is driving.
  • Commercial use: If you insure your personal car under the insurance policy, you will not be covered if your car is destroyed while doing some commercial activity, meaning driving an Uber or for deliveries. Such commercial cars are covered under commercial insurance policies.

Auto Insurance Cost

Driving a car without insurance is deemed illegal in some states, which is why having your car insured has become a need for so many people. With this it is also important to know how much full coverage policy costs.

If a person has full coverage of auto insurance, they will also cover collision, comprehensive and other charges. But full coverage will also mean paying higher premiums.

Let’s look into the figures to evaluate better.

Coverage type Study limits
Bodily liability $50,000 per person/ $100,000 per accident
Property damage $25,000 per accident
Uninsured/underinsured motorist BI $50,000 per person/ $100,000 per accident
Comprehensive & collision $500 deductible
Personal injury protection Min. when required by state

Note: Sample rates have been extracted online, courtesy of ValuePenguin.

Deciding whether you need full coverage or not should really reflect on your needs; if you’re the only one who drives and you’re a careful driver, chances are low that you will be met with accidents. In such a case don’t burden yourself by paying a high amount of premiums because a full coverage policy may seem attractive to you.

Whatever policy you’re buying, make sure you read exactly what is covered in your policy and what isn’t. Even if you buy a half insurance policy, you will still be covered for liability and medical expenses; so if you don’t need full coverage, don’t opt for it!

Nabeel Ahmad

Nabeel Ahmad

Nabeel Ahmad is the founder and editor-in-chief of Insurance Noon. Apart from Insurance Noon, he is a serial entrepreneur, and has founded multiple successful companies in different industries.

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