auto insurance coverage

Auto Insurance Coverage: What You Need to Know

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Updated October 29, 2018

Do you have the right kind of insurance to protect you in an automobile accident?

Despite what their commercials say, the insurance company won’t take care of you in an auto accident unless you take things in your hands.

Don’t leave it in their hands. Make sure you have the right kind of insurance coverage and know what questions to ask when filing a claim.

  • What are you liability limits?
  • Do you carry collision insurance?
  • Does your policy include Medical Payments (or Med Pay) coverage?
  • Do you have Uninsured Motorist and Underinsured Motorist coverage?
  • Do you need additional endorsements or insurance, such as GAP coverage or an umbrella policy?

Continue reading to find out why each type of coverage is important:

Liability Insurance

Under state law in North Carolina, drivers must have automobile liability coverage. The minimum coverage requirements are $30,000 Bodily Injury for each person, $60,000 total Bodily Injury for all persons in an accident and $25,000 for Property Damage, according to the N.C. Department of Insurance. You might see this expressed as 30/60//25 coverage. You should consider purchasing more than the minimum required liability insurance.

Liability insurance falls into three categories: bodily injury liability, property damage liability and supplementary payments.

  • Bodily Injury Liability pays for damages suffered by other people who are injured in the accident. Coverage includes medical bills, funeral expenses, lost wages, disability, rehabilitation, pain and suffering, lawsuit settlements and legal expenses.
  • Property Damage Liability pays for damages to other people’s property. This coverage pays for car repairs and other property damage.
  • Supplementary payments provide coverage for other accident-related expenses not covered by the other liability limits. This could include bail bonds, your lost wages if the insurance company requires you to miss work to testify in court and other reasonable expenses incurred at the insurance company’s requests. You should review your policy or ask your insurance agent about your limits and exclusions for this type of coverage.

The bottom line: If you are involved in an accident, you may have to explicitly ask your insurance company about your liability package to receive your full coverage benefits.

Collision Insurance

The state of North Carolina does not require motorists to have collision insurance, but most lenders require it of drivers who are financing their vehicles. Collision insurance pays for damage to your vehicle during an accident. If you don’t have collision insurance and are found to be at fault for an accident, you will have to pay for repairs to your vehicle out of your pocket.

Comprehensive Insurance

This type of insurance covers other types of damage to your car (not resulting from an automobile accident) including fire, theft, hail damage, broken windows and flood damage.

The state of North Carolina does not require comprehensive insurance, but some banks and lenders may.

Medical Payment (Med Pay) Coverage

If someone else is found liable an automobile accident, their liability insurance should cover at least some of your medical treatment – depending on their coverage limits. Many motorists may opt to purchase Medical Payment Coverage as part of their insurance package to cover medical or funeral bills incurred as a result of an automobile accident.

This type of coverage is not required by law, but it will pay for medical treatment for the driver, family members and any passengers in the vehicle up to your coverage limits. Med Pay is good coverage to have. It is extremely flexibility, and it gives you a way to cover your medical expenses right away, even before an insurance settlement. In order to collect Med Pay benefits, you simply need to prove that you’ve been injured and that the treatments you’ve received are reasonable.

If you’re injured, you may have to ask to have Med Pay cover your bills. The insurance company may not inform you that these benefits are available to you.

Uninsured/Underinsured Motorist Coverage

Though the state requires all drivers in North Carolina to carry liability insurance, some people do not obey the law. Or their insurance policy may not cover the full extent of your costs for bodily injury and property damages. In such cases, Uninsured/Underinsured Motorist Coverage can fill in the gap.

Uninsured Motorist coverage is a significant benefit, if the driver who is at fault in the accident doesn’t have insurance. Contact your insurance agent immediately if this coverage isn’t listed on your policy.

Underinsured Motorist coverage comes into play when the other driver doesn’t have enough insurance to cover your injuries and damages. If the other driver is underinsured, your own insurance policy can help cover the damages if you carry Underinsured Motorist coverage. Contact your agent if this coverage isn’t listed on your policy.

Insurance companies and their agents are required to offer Uninsured Motorist and Combined Uninsured/Underinsured Motorist coverage, but drivers are not required to accept this coverage. If you do not wish to have this coverage, you must reject it in writing. We don’t advise skipping this type of coverage.

Additional Automobile Coverage

In addition to the basic automobile coverage offered, you can buy additional insurance policies that provide further protection and coverage in the event of an accident.

These include:

Automobile Death Indemnity, Specific Disability and Total Disability Benefits Coverage

This endorsement will provide a benefit for death, dismemberment, specific disability and total disability resulting from an automobile accident.

Coverage for Rented Vehicles

This endorsement provides coverage for you or a family member who rents a rental vehicle on a daily basis for less than 22 consecutive days.

Coverage for Damage to Your Auto (Customizing Equipment Coverage; Coverage for Audio, Visual, and Data Electronic Equipment)

Through this endorsement, the limits of liability are increased to pay for damage to custom furnishings and custom equipment, and for additional permanently installed electronic accessories.

Towing and Labor Costs Coverage

This policy pays for towing and labor costs each time your covered automobile or any non-owned automobile is disabled or the keys are lost, broken or accidentally locked in the car.

Extended Transportation Expenses Coverage (Rental Reimbursement)

This coverage will pay, up to a specified rate and maximum total amount, for a rental car and other transportation expenses incurred while your vehicle is out of commission (such as when it’s being repaired).

Guaranteed Automobile Protection

This very important protection often called GAP insurance covers the difference between the actual cash value of your car and your loan balance. Many times, people will owe more on their vehicle than the insurance company determines it is work. GAP insurance covers the difference in those two figures, but it is generally available only on new vehicles.

Umbrella Liability Insurance

An umbrella policy provides coverage on top of your normal automobile liability insurance and provides extra protection should you be sued as a result of a car accident. Umbrella policies may provide anywhere from $1 million to $5 million in additional liability coverage on top of your existing automobile liability coverage. Umbrella policies, which usually cost $200 to $300 annually for $1 million in coverage, have high deductibles and don’t kick in until your other insurance policies have paid. Though these policies have high deductibles, your out-of-pocket expenses usually aren’t very high at all because other insurance policies cover the umbrella deductible.

Source: N.C. Department of Insurance, MSN Money

Saving Money on Automobile Insurance

You may be able to save money on automobile insurance if you have a safe driving record, if your car has certain safety features or if you have multiple insurance policies with the same company. Be sure to inform your insurance agent if any of the following apply to you or your vehicle, as this could lower your automobile insurance premium.

  • Your vehicle has anti-lock brakes.
  • Your vehicle has an anti-theft device.
  • Your vehicle has daytime running lights.
  • You agree to pay your insurance premiums electronically.
  • You are renewing your policy and did not have a loss or conviction during the last policy period.
  • You are considered a mature driver (normally age 55, but ages for eligibility can vary by company).
  • You have more than one automobile on the same policy.
  • You have insurance on your home and automobile with the same company.
  • Your vehicle has a passive restraint system (air bags, automatic seat belts and other safety equipment may qualify).

We recommend printing out this information and taking it with you when you meet with your insurance agent. The time to make sure you have proper coverage is now, before an accident, not afterwards.

You may also want to print copies of our What To Do In An Auto Accident Checklist to keep in your glovebox in case you are in an accident.

Print as many copies of the checklist as you need and put them in your car, your spouse’s car, your kids’ cars and your parents’ cars. It’s designed to go in the glove compartment with your registration card.

Even for our own employees, it’s easy to forget what to do in the chaos after an auto accident. Our checklist will help you keep your wits about you and will ensure that you don’t forget to get some crucial bit of information, such as the names and contact information for all witnesses.

We hope you’ll never need these documents, of course. But better to be prepared.

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