Understanding Car Insurance: What It Covers and What It Doesn’t

Car insurance is a crucial aspect of vehicle ownership, providing financial protection against various risks. According to the 2019-2020 Auto Insurance Database Report from the National Association of Insurance Commissioners, the national average annual premium for car insurance is $1,176. While this cost may seem steep, the benefits of having car insurance far outweigh the expense. At O1ne Mortgage, we understand the importance of securing your financial future, and we are here to help you navigate the complexities of car insurance. For any mortgage service needs, feel free to call us at 213-732-3074.

What Car Insurance Covers

Car insurance policies can vary widely, but a standard auto policy typically covers several key areas. These include:

Liability Coverage

Liability coverage is the most basic form of car insurance and is required in most states. It includes:

• Bodily Injury Coverage: This covers medical costs for injuries to other people in an accident you caused. It does not cover your medical costs if you caused the accident.
• Property Damage Coverage: This pays for damage that you cause to another person’s property, either their car or other belongings, when you cause an accident. It does not pay for damage to your own car or belongings if you’re at fault in the accident.

Medical Coverage or Personal Injury Protection (PIP)

Medical payments coverage helps cover medical expenses for you and your passengers in the event of an accident. PIP coverage goes a step further by covering additional expenses related to your accident, such as lost income during hospitalization or recovery.

Uninsured and Underinsured Motorist Coverage

These types of coverage kick in when you’re in an accident with another driver who doesn’t have insurance (uninsured motorist coverage) or one who doesn’t have enough coverage to pay for all the costs (underinsured motorist coverage).

Comprehensive and Collision Coverage

For those seeking extra peace of mind, full coverage insurance includes:

• Comprehensive Coverage: This protects against damage to your vehicle that isn’t caused by an accident, such as theft, vandalism, and natural disasters like hail or falling trees.
• Collision Coverage: This helps pay for the repair costs of your vehicle when you get into a collision of any kind, including hitting a deer, telephone pole, or pothole.

Additional Forms of Car Insurance Coverage

Beyond the standard coverages, there are several additional options you might consider to tailor your policy to your needs:

Rental Car Reimbursement

This coverage pays for a rental car if your vehicle is in the shop due to a covered loss.

Roadside Assistance

Adding this coverage provides help with flat tires, towing, dead batteries, locking your keys inside, and other common roadside issues.

Rideshare Coverage

This additional coverage is aimed at those who drive for companies like Uber or Lyft, covering you when your company’s coverage is not enough.

Gap Insurance

If you have a loan on your vehicle, gap insurance can cover the difference between what you owe on your car and what it’s worth if it’s totaled in an accident.

Speak with your insurance agent to determine which additional coverage may be right for you and your driving habits.

What Car Insurance Doesn’t Cover

It’s equally important to understand what car insurance policies do not cover. Common exclusions include:

Intentional Damage

Any damages caused intentionally to your car, such as breaking a window because you’re locked out or setting your car on fire for insurance money, are not covered. Some policies also exclude damage caused if you have an accident while under the influence.

Damage Exceeding Your Coverage Limits

If the accident you caused is a pricey one, your insurance will only cover the losses up to its maximum limit. Any repair costs or medical bills above that threshold will need to be covered out of pocket.

Mechanical Breakdowns

Insurance policies cover damage caused by accidents, but they do not cover mechanical breakdowns like engine failure or transmission problems.

Normal Wear and Tear

Regular maintenance and wear and tear on tires, brakes, or other parts are not covered by car insurance policies.

Personal Belongings

Any damage or theft of personal belongings inside the car, like laptops or phones, is not covered by car insurance policies. However, it is possible to list the personal belongings inside your car on a homeowners or renters policy with many insurance companies.

Racing or Illegal Activities

Any damage caused while participating in activities like racing or other illegal actions will not be covered under insurance policies.

Aftermarket Add-Ons

Damage or theft of aftermarket add-ons like a cool stereo system or flashy rims is not likely to be covered by your car insurance.

Drivers Not Named in Your Policy

If your roommate or teen child isn’t listed on your auto insurance policy but drives your car, any accidents they have won’t be covered.

It is essential to read and understand the policy documents thoroughly to ensure that you have adequate coverage in case of an accident and to understand the circumstances under which coverage may not be provided.

The Bottom Line

Getting an auto insurance policy that fits your needs can be tricky. At O1ne Mortgage, we are committed to helping you find the best coverage for your situation. For any mortgage service needs, call us at 213-732-3074. Our team of experts is here to assist you in securing your financial future.

Remember, understanding your car insurance policy is crucial to ensuring you are adequately protected. Don’t hesitate to reach out to us for any questions or assistance in finding the right coverage for you.