A lot of folks don’t know the coverage of their can insurance. They just want to buy a car insurance package because the State forces them to do so. Many car owners don’t really understand the car insurance terms and lingo such as PLPD.
If you’re looking look for a basic car insurance policy, go for auto insurance with Personal Liability, and depending on which state you reside, PIP Coverage and Uninsured Motorist.
So, what exactly do these terms mean?
Let’s take a look.
Personal Liability Insurance
Personal Liability coverage is the bare minimum component of every car insurance policy. This essentially means when you accidentally cause an accident, inflicting injury to another person or their property, your insurance company will compensate for the victim on your behalf.
The amount of coverage can be different depending on your State. However, many car insurance agents say state minimum liability limits are not enough. The preferred limit of liability is 100/300/100.
How Does it Work?
The Personal liability car insurance policies offer three types of coverage. However, the coverage is not meant for your car. Rather, it is meant for the other drives on the road who may suffer physical injury or have damage to their car because of you.
As for the coverage of personal liability car insurance, it’s up to you.
The coverage limits of a personal liability car insurance maybe 100/300/100 or 100,000/300,000/100,000 which essentially mean the following things:
Bodily Injury Liability Limits per Person
Taking the above example into account, the first figure ($100,000) is the maximum amount of compensation your insurance company is willing to pay out to a single person who is injured in the accident caused by you.
Bodily Injury Liability Limits per Accident
The second figure ($300,000) is the maximum amount of money your insurance company will pay out per accident. If multiple people are injured in an accident caused by you, that’s the maximum limit your car insurance company will payout.
Please, keep in mind, in accidents where multiple people have suffered injuries, this liability may become higher than the coverage limit. In such a case, your insurance company will try to recover the amount from you. While buying car insurance with personal liability, pay particular attention to this feature. The higher the limit the better. In most cases, the state minimum car insurance limits are too low.
Property Damage Liability Limits
The property damage liability limit covers any potential compensation for damage to an intimate object belonging to another person in an accident caused by you. The property could be someone’s car, a guard rail, or even a house. In reality, the cost of property damage may add up pretty quickly. Therefore, you need to buy car insurance which offers a sufficiently higher cover limit to provide for the protection.
Uninsured Motorist is an additional clause or provision in auto insurance policy wherein your insurance company will compensate you for the damage caused to an uninsured motorist. It covers both bodily injury as well as damage to your car. Moreover, the coverage also includes bodily injury to anyone in your car.
If you have Uninsured Motorist coverage, then your insurance company will pay the difference between what the uninsured driver can pay and what you would be entitled to if the uninsured driver had proper insurance.
While Uninsured Motorist is an additional clause in car insurance policies in most states in the United States, in some states such as Pennsylvania, Illinois, Maryland, and New York, it is mandatory for your insurance company to provide such coverage.
In states where Uninsured Motorist is optional, you need to pay a premium if you want to include the coverage in your policy.
Underinsured Motorist is a clause that protects you when an accident is caused by a driver carrying a lower personal liability coverage than your liability coverage. In such a case, your insurance company will pay the difference.
Underinsured Motorists can be very useful when you have a very high coverage limit. Remember, the process of suing a driver to recover compensation can be very complex and lengthy. In most cases, they don’t even have the means to pay thousands of dollars in damages.
PIP and Medical Coverage
PIP of Personal Injury Protection provides coverage for expenses related to injuries including rehabilitation and loss of income. On the other hand, Medical Coverage has limited coverage. Medical Coverage is a minimum requirement in some states. However, you should opt for this coverage even when it’s not a minimum requirement in your state. The minimum Medical Coverage usually falls between $3,000 to $50,000.
Not So Basic Coverage
There are car insurance coverages that are not a basic part of your policy. You need to opt for the coverage in addition to the minimum coverage.
For example, if there’s damage to your windshield without any collision, comprehensive coverage can be handy.
Similarly, Collision Coverage protects you when you hit an inanimate object.
A Road Accident coverage can help you need a tow while Car Rental coverage pays out the cost for renting out a car when your car is being repaired.