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Insurance Coverage Definitions | Car Insurance Coverage

Auto insurance coverage is packaged into different coverage types. It is usually easiest to determine what you are required to purchase. Then, you determine what you have that needs to be protected. You purchase insurance to protect yourself (your family) in the event that you suffer a loss to your person or property and you purchase insurance to protect yourself (your family) from losses suffered by others. Below is a breakdown of each car insurance coverage type to help you understand more about what each type of coverage protects. Next to each type is a term that is usually associated with that coverage type (i.e. BI and PD).

LIABILITY COVERAGE (LIABILTY)

BODILY INJURY LIABILITY (BI):

Covers other people's bodily injuries or death for which you are responsible. It also provides for a legal defense if another party in the accident files a lawsuit against you. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets. Bodily injury liability covers injury to people, not your vehicle. Therefore, it is a good idea (and usually a company requirement) to have the same level of coverage for all of your cars. Bodily Injury Liability does NOT cover you or other people on your policy. Coverage is limited to the terms and conditions contained in the policy. It is mandatory in most states.

How much protection does this coverage provide?

The dual coverage limits refer to the maximum amounts that will be paid per person, per incident, respectively.

Essential things to keep in mind when selecting your Bodily Injury limits:

If you select limits that are too low, you could be putting yourself at risk financially.

For example, if either you or a driver covered by your policy cause a serious injury where damages exceed your limits, you will be held responsible for the amount above your limits. To make that payment, you could be forced to liquidate property, savings, and other assets, or your future earnings could be attached. By purchasing liability limits to account for both your current assets and future net worth, you can help protect yourself against this risk.

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