Optional Auto Insurance Coverages

Optional Auto Insurance Coverages

Collision coverage pays for physical damage to your auto as the result of your car colliding with an object, such as a tree or another vehicle. This insurance coverage is based on the value of your car and can be costly.

Car insurance policies only require the company to cover your financial losses, not to replace your car. In the case of an accident involving an older vehicle, the cost of repairing it can quickly exceed the value of the auto and your insurance carrier will pay you what the car was worth rather than fix it. In severe cases, the value of the vehicle may be less than premiums paid for the insurance coverage. Therefore, if your car is worth less than $2,000, there is little reason for you to purchase collision coverage, because you are likely to pay more money in premiums than you would ever receive as a result of your claim. This coverage may not pay the full replacement cost of the car or may not satisfy the balance of your auto loan.

Comprehensive coverage pays for damage to your vehicle from almost all other causes besides a car accident, including fire, severe weather, vandalism, flood and theft. Comprehensive insurance coverage also will cover broken glass, such as windshield damage.

Uninsured motorist coverage pays if you incur losses from a driver who does not have auto insurance or a hit-and-run driver. This coverage, when in effect, takes the place of the insurance that the other driver should have had but did not. The coverage comes at an automatic $250 deductible for property damage, regardless of the deductible you may have on your other insurance coverage.

Uninsured motorist coverage will have policy limits. It does not protect the other driver. Your insurance company may sue the other driver for any money the company pays to you because of the other driver’s negligence. You must have made a police report about the car accident in order to make a claim under an uninsured motorist policy.

Under-insured motorist coverage protects you if you are involved in a car accident that is not your fault and the other driver does not have enough insurance coverage to cover your loss. This coverage does not pay for damage to your car.

Towing and labor coverage pays the cost of towing your vehicle to the repair shop subject to the limit of your policy. Premiums for this insurance coverage are very inexpensive. However, if you are a member of an auto club, you probably already have this service.

Rental reimbursement coverage usually pays the cost to rent a vehicle after an accident, subject to the policy's terms. The premium will vary from insurer to insurer.

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