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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 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 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.
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Report All Auto Accidents To Your Insurance Company
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If an accident involves another individual (including a passenger in your vehicle) or another individual’s property,
you must report it, even if you do not file a claim. If you do not report the accident, and the other individual
involved later sues you for injuries or damages, your insurance company would be at a disadvantage in defending
you against the claim. The company might deny you coverage or nonrenew your policy because you did not report the
accident. Lawsuits can result from any accident — no matter how insignificant.
To protect yourself, report all accidents to your insurance company.
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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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