It can be confusing to shop for car insurance. There are so many options. The insurance industry is known for using acronyms and jargon to describe everything. Only Property Damage and Bodily Injury are mandatory coverages in every state. All other protection is optional. Each state has its own minimum requirements for residents. Here are some examples and definitions of the coverages that are available.
Bodily injury (BI): This covers medical bills for the passengers in the car that you hit. Two numbers are used to indicate the coverage. The first number is the coverage per person and the second the coverage per accident. This coverage is sometimes listed with three numbers. The third number indicates the amount of property damage that you caused. Oregon’s minimum state requirements are 25/50. The result is that each person will only receive $25,000 to cover medical bills if they are involved in an accident. This leaves $50,000 for the entire family. Your insurance will not cover $50,000 for a vehicle with three passengers. If they require $25,000 each, you could be sued for $25,000. It is possible to get additional coverage beyond what your state requires. This coverage does not require you to pay more.
Property Damage: This includes any damage that you cause to another person’s property. It doesn’t matter if it’s a car, a telephone pole, or a house. This is often the third number for bodily injury in many states. In Delaware, for example, the minimum law requires is that you have 15/30/5. If you have the minimum coverage required by law, and you are involved in an accident with another vehicle, your insurance will pay $5,000 for that repair and you can be sued. You can’t buy a new BMW if you have only the minimum state coverage.
Uninsured Driver (UM): If you are struck by someone without car insurance, this will pay for the medical bills. It is listed with the same numbers as bodily injury. Although every state requires that every vehicle be insured, there are still people who don’t have insurance.
Uninsured Motorist (UIM: This covers your medical bills if you are ever struck by someone without enough insurance. If, for example, your medical bills exceed $30,000 and the other driver does not have the minimum required by law, which is $15,000 in the state of California, your insurance will pay the difference.
Uninsured Motorist property Damage (UMPD: This coverage protects your vehicle against damage caused by collision. It covers you if your state permits. UM covers your medical costs only if you are struck by someone without insurance. Both will protect you, your passengers, and your vehicle against those who hit you.
Personal injury protection (PIP: This coverage is optional in certain states, but required in others. This coverage covers medical expenses, but the details vary from one state to another. Talk to your agent to learn more.
Comprehensive (Comp). This is one side of the full coverage. It covers your vehicle against fire, theft and vandalism as well as glass, falling objects, animal hitting, and malicious mischief. Your insurance will pay the remainder.
Collision: This coverage is half of full-coverage insurance. If you hit someone without insurance or are involved in a hit-and-run, it covers your car. You must first pay your deductible, just like comp.
Towing: This is coverage for towing your vehicle up to a certain amount.
Rental: This coverage will allow you to rent a car while your vehicle is being repaired. This is a per-day/per-incident coverage. If you have coverage at 24/600 it means that your insurance will cover a rental car at $24 per day and a total bill of no more than $600.
