Car insurance basics - Medical coverage

In our previous articles on liability insurance and comprehensive coverage, we introduced the most basic forms of car insurance. Liability takes care of any damage you cause to other people and their property. Collision takes care of any damage you do to your own car and property. Comprehensive coverage takes care of problems caused by non-vehicular accident problems, such as theft, fire and natural disaster.

In addition to the above coverage, you will also likely have some sort of medical coverage. This will pay for medical expenses that you incur as a result of an accident in your car. In some states, this coverage is known as PIP, or Personal Injury Protection. That’s generally the term used in states that have no-fault insurance laws. Generally, your insurer will pay your medical bills regardless of who is at fault. If the other party is at fault, your insurer may pay your bills and then seek to recover them from the other party’s insurer.

The minimum amount of medical coverage is usually sufficient, especially if you have other health insurance coverage, as you might have through your employer. If you don’t have this type of protection, you might wish to speak to your insurance agent about purchasing more.

Underinsured or uninsured motorist coverage is insurance to protect you should you be involved in an accident with a driver who leaves the scene of an accident, one who has no insurance, or one who has insurance but does not have enough to cover the damage they have caused. Most states require this coverage; you never know who is going to hit you, but it’s always a good bet that whoever does is insufficiently insured. 

Additional types of coverage - The previous articles covered most of the types of protection that you must have. Your insurance company will also offer a number of add-on policies that may be worth considering, depending on your circumstances. This additional coverage may include:

Rental reimbursement - If your car is damaged in an accident or stolen, this protection will pay for a rental car for the time your car is unavailable or out of service. In cases where another party is at fault, their insurance will usually pay for this, but it’s fairly inexpensive and saves you the hassle of doing without a car.

Towing - If you live in the middle of nowhere, towing coverage is a must. It is usually pretty inexepensive (we pay something like $12 per year for two cars) but it will pay a certain amount to have your vehicle towed to a garage should you break down on the highway. If you have seen how much they charge to tow vehicles these days, you know this is worth the money.

Gap coverage will pay for the difference in value between your vehicle’s market worth and the amount you owe on it should the vehicle be rendered a total loss in an accident. This is essential if you are buying a new vehicle and are paying for it over a period of more than three years.

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