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When you buy an auto insurance policy, you are buying a package of individual coverages.
Each coverage protects you against different types of losses. Once you understand the various
coverages, you can decide which ones to include in your personal insurance package. You can
also determine the limits of coverage you will need.
It is best to read your policy to understand it. Insurance coverage is very specific.
Policies are legal contracts containing exceptions, exclusions and limitations.
Liability Coverage
Each state has legal requirements for a minimum amount of financial responsibility in case
of an automobile accident. A common way to fulfill that responsibility is with auto liability insurance.
Liability coverage (bodily injury and property damage):
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Protects you, your family and operators
of your vehicle from claims made against
you when you are legally liable for an
auto accident that results in injury or
death to others or damage to their
property.
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Covers you and your family while
operating a non-owned vehicle from
claims made against you when you are
legally liable, if you do not regularly
use the vehicle.
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Generally sold with split limits — often expressed as a series of three numbers.
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Example Of Split Limits 100,000/200,000/50,000
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Bodily Injury
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Bodily Injury
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Property Damage
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$100,000 per person
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$200,000 per occurrence
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$50,000 per occurrence
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Generally available with limits up to $1 million. If you think you might
need higher limits of auto liability coverage, consider purchasing an umbrella liability policy.
Selecting liability coverage limits.
This is perhaps the most difficult part of
buying auto insurance.
Most individuals prepare for the worst and hope for the best.
To help you determine how much liability coverage you need, consider your assets,
age, income and ability to pay higher premiums.
It is important to purchase adequate limits to protect your assets if you are held legally liable
for an accident that results in serious injury or death to others. If you should be held legally liable
for amounts greater than the liability coverage limits you choose, you are personally responsible.
There is no way to predict what an accident might cost you, but there are some general rules.
Your potential cost would be higher if you:
- Seriously injure or kill an individual in an accident.
- Are guilty of negligent driving.
- Are guilty of driving under the influence.
- Live in an area known for its high jury awards.
Coverage for claims by family members against family members differs from state to state. Some
states require auto liability insurance to pay up to the full liability limits for the claim of a family
member if another family member caused the accident. Other states require a payment, but only up to the
state’s minimum financial-responsibility limit, while other states allow insurance companies to completely
exclude coverage for claims between family members.
Medical Payments Coverage
Medical payments is an optional coverage available in states without no-fault coverage.
It may also be an excess coverage in those states that require no-fault coverage.
Medical payments coverage pays for the following regardless of who is legally liable in the auto accident:
- Reasonable and necessary physician and hospital bills related to the
accident for you, your family and your passengers.
- Reasonable funeral expenses for you, your family and your passengers, if necessary.
- Coverage for you and your family members while in another individual’s vehicle or as pedestrians.
It does not cover pain and suffering.
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