What exactly does my auto insurance policy cover?

Before the 1950’s, if you wanted to purchase all the coverage today’s auto insurance policy provides, you would have had to purchase at least four separate policies. Changes in the laws that regulate the sale of insurance now allow the insurance industry to sell policies that combine the separate parts into one all-encompassing policy. The main advantages of combining the parts are lower expenses, and therefore a lower cost to consumers, and the convenience of being able to purchase Liability, Medical Payments, Personal Injury Protection (PIP-a/k/a no-fault benefits) and physical damage coverages in one convenient package policy.

Part A of an auto policy is liability coverage that protects you from lawsuits arising from negligent operation or ownership of a covered automobile. There are two types of coverage in Part A – bodily injury liability (BI) and property damage liability (PD).

  • BI covers the bodily injury claims of people you negligently injure in an accident.
  • PD covers any third party property damage claims the courts determine you must pay.

Part B provides medical payments to you and any other passengers of your vehicle that are injured in your vehicle. It is separate from liability and no-fault coverages and is sometimes referred to as “good will” insurance. It is quite inexpensive, and provides an additional cushion of coverage above your no-fault coverage limit.

Part C provides uninsured motorist and underinsured motorist protection for the policy owner. Uninsured motorist coverage provides coverage to you for your injuries sustained in an accident with another party who does not have any insurance to cover this accident. Under-insured coverage gives you protection in the event the other driver does not have adequate liability insurance to cover you. You have the option to purchase limits for Part C up to your liability limit of Part A of your policy. We highly recommend this option!

Both B and C are designed to compensate you when the negligent driver doesn’t have enough liability insurance under his/her policy. In New York State, Part C covers only bodily injury losses, but property damage losses are included in some states.

Part D Coverage for Damage to Your Auto covers damages to your car when it is involved in an accident. This is where collision and other than collision (Comprehensive) coverages are found, as well as towing and labor and transportation coverages.

Part E of the policy cover your Duties after an accident or loss.

Another important component of the Personal Auto Policy in New York and most other states is Personal Injury Protection (PIP), also sometimes referred as no-fault. You and the passengers in your car are covered for their injuries sustained in an accident. Your auto policy pays, regardless of who is at fault. Coverage includes medical expenses, loss of earnings, and necessary expenses arising as a direct result of the accident. Basic coverage usually starts at $50,000., but higher limits may be purchased, and coverages may also be extended to accidents occurring out of state.