Despite its name, personal auto insurance covers most types of private motor vehicles. Generally, this type of insurance provides insurance coverage for any damages or injuries to the insured. It also provides protection to an insured against any financial loss to property damage or bodily injuries, during maintenance, operation, or use of an insured vehicle.
Most car insurance companies use standardized insurance policies, instead of creating new ones from scratch. One of these standardized policies is developed by the Insurance Services Office, called the Personal Auto Policy (PAP). The PAP is the coverage applied for insuring privately owned vehicles. It covers van and pickups with a net weight of less than ten thousand pounds and are not used for commercial delivery and for other business activities.
The Personal Auto Policy provides coverage in the form of liability coverage, collision coverage, and comprehensive coverage.
Types of Coverage
Liability Coverage
The automobile liability coverage takes care of any liabilities, damages, and defense costs an insured is legally bound to pay for. The cost of defense can cover over and above the liability limit, but this cannot be provided if the liability is not covered. In cases where the liability is covered, the insurance provider has the right to investigate and independently resolve any claims of the insured.
Collision coverage
As the name suggests, collision coverage covers any damages as a result of a collision with another motor vehicle. This type of coverage pays for the actual cash value of repair for the insured vehicle after a collision with another vehicle, flip overs, or crashes, regardless of whoever may have caused the accident.
Comprehensive coverage
The comprehensive coverage covers all losses and damages which are not caused by collision to the insured’s vehicle. These include theft, windshield damage caused by stones, vandalism, etc. Comprehensive coverage and collision coverage are usually optional, and most people purchase these types of coverage for a new vehicle they have bought. For new motor vehicles purchased through a loan, most lenders require any of the two to protect their collateral.
Remember…
When buying an insurance policy for your motor vehicle, be careful and take note of terms such as “what’s required” and “full coverage,” because how these terms apply may vary from one person to another. Therefore, you should first assess your needs so you can determine the type of coverage and amount of insurance that is best for you.