Understanding Automobile Insurance Coverage and Claims

Chapter 2: Automobile Insurance Fundamentals

Automobile insurance provides essential financial and medical protection. Various risk factors determine your insurance premiums, and insurance companies compensate you for losses you incur or those you cause to others.

Types of Insurance Coverage

1. Liability: Legal responsibility to provide compensation for certain types of injury or loss.
2. Medical Expenses: Pays for physical injuries you or your passengers sustain while in the vehicle.
3. Physical Damage: Covers your vehicle from collisions and other events, such as theft or vandalism.
4. Underinsured/Uninsured: Covers accidents involving parties that are not properly insured.

Basic Liability Requirements

Most basic policies include minimum liability requirements:

1. Bodily Injury Liability: Covers physical injury to anyone in another vehicle involved in an accident that is your fault.
2. Property Damage Liability: Covers damage to other vehicles in an accident that is your fault.

Understanding Liability Limits (e.g., 15/25/10)

• 15: Bodily injury limit per person.
• 25: Total bodily injury limit (for two or more people).
• 10: Property damage limit.

Additional Coverage Options

1. Comprehensive Insurance: Compensates you for physical damage to your car, including theft, vandalism, and weather damage.
2. Collision Insurance: Pays for damage to your vehicle in a collision, regardless of fault.
3. Depreciation: The reduction in a car's value as it ages. If repair costs exceed the car's current value, the vehicle is considered "totaled."
4. No-Fault Insurance: No blame is assigned to vehicle owners; each insurance company negotiates independently.

GAP Insurance

GAP insurance protects car owners against losses when the compensation received does not fully cover the amount still owed on the vehicle. For example, if the market value is $15,000 and the amount owed is $20,000, there is a $5,000 difference.

Steps to Take After an Accident

If your car is stalled or left for a period of time, remove your license plates.

1. Help anyone who is injured.
2. Notify the police.
3. Prevent further accidents.
4. Preserve the accident scene.
5. Admit to nothing.
6. Record information: Get the other person's driver's license and insurance info, witness statements, and take photos or videos.
7. Answer police questions truthfully.
8. Sign the ticket.

After the accident: Call your insurance company, file a claim, and submit an injury report.

Your insurance company will represent you if you are sued and has the right to settle any litigation without your permission. Remember: Large losses often lead to large lawsuits.