Understanding the Basic Coverages of RV Insurance- An Excellent Overview from AIG.com with content added by Bruce Bernhart
If you are involved in an accident or have your car stolen, having the right kind of auto insurance can help protect you against financial loss. Auto insurance is simply a contract between you and your insurance company. You agree to pay the insurance premium and the insurance company agrees to pay your covered losses in the event of a claim.
There are seven major types of car (RV) insurance coverages available to you:
1. Bodily Injury Liability
This vital insurance is required coverage in most states. It applies to injuries that you, the designated driver or policyholder, cause to someone else. It pays the medical bills, lost income, pain and suffering, even funeral expenses for people who are injured in an auto accident (provided you were held responsible for their injuries). Family members listed on the policy are also covered when driving someone else’s car with their permission.
It is very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. You should therefore consider carefully whether the coverage you have chosen is adequate to protect your financial security against the expenses for which you could legally be held responsible. Expenses are only paid up to the limit of coverage you have selected, so you should definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This auto insurance pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs. In addition, PIP will protect you and other household family members if you are injured while riding in another person’s car.
This is an optional insurance*, mainly because it may duplicate coverage in your comprehensive health plan. However, many policyholders believe that it is a good idea to carry Medical Payments coverage for those out-of-pocket expenses their health insurance may not cover (like an annual deductible or co-payments). Another reason to consider adding PIP when requesting an auto insurance quote is to ensure there is some protection for those passengers in your auto who may not have health insurance.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage caused to lamp posts, telephone poles, fences, buildings or other structures. With even used autos having book values of $15,000 or higher, it is in your best interests to get adequate coverage—enough to repair or replace someone else’s car.
As with Bodily Injury Liability insurance, it is probably better to overestimate, rather than underestimate Property Damage Liability coverage. This type of auto insurance coverage is mandatory in most states.
4. Collision
This coverage protects your car. It pays for damage to your vehicle resulting from a collision with another car or object, or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium.
Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car—minus the deductible—up to the limit of the actual cash value of your car. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, theft, falling objects, earthquakes, hail, floods, vandalism, riots or damage caused by hitting an animal (such as birds or deer). Comprehensive auto insurance also provides coverage, without a deductible, for transportation expenses incurred by you in the event of a covered loss. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered after your policy’s deductible (if any) is applied.
If one of the covered damages occurs, you simply pay the deductible amount, and the comprehensive coverage pays the remaining repair or replacement expenses, up to the limit of the actual cash value of your auto. Comprehensive insurance is usually sold with a $100 to $300 deductible, though you might want to opt for a higher deductible as a way of lowering your premium.
States do not require that you purchase collision or comprehensive coverage, but if you have a car loan, your lender may insist you carry it until your loan is paid off.
6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver who is held legally responsible for your injuries. It pays medical and other related expenses up to the limits of the coverage you select.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
7. Towing and Labor
Towing and Labor coverage helps to reimburse expenses you incur if your car is temporarily disabled. It is available if you have purchased at least Comprehensive coverage.
*Personal Injury Protection may be required if your policy is issued in a state which has “No Fault” or “Reparations” laws governing your auto insurance.
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