Auto Insurance

Auto insurance protects you from financial ruin in the event of an auto accident. It also comes to the rescue if your car is vandalized, catches on fire or is stolen.

Beyond protecting you financially, auto insurance is a social responsibility. Those who drive without insurance, and without the ability to pay for damages they cause, put the rest of us at great financial risk.

That's why all states (even Missouri) require drivers to carry liability insurance. A basic auto insurance policy contains six types of coverage. Depending on where you live, some coverages are required and some are optional.

Auto Insurance is comprised of:

            1. Bodily Injury Liability

            2. Property Damage Liability

            3. Medical Payments 

            4. Collision

            5. Comprehensive

            6. Uninsured/Underinsured Motorists Coverage


Liability Insurance

Liability coverage is mandatory. States require certain levels of minimum liability insurance because that's the coverage that pays for damage you do to others, including bodily injury and property damage. It also pays for your legal bills if you cause an accident. Typically, Liability insurance is purchased in two parts. They are defined as Bodily Injury and Property Damage.

Bodily Injury coverage includes medical bills and lost wages. It can also pay for "pain and suffering" damages if someone sues you after a car accident. Property Damage coverage pays to repair or replace property you destroy, such as other cars or property you run into, such as fences.

Remember, your responsibility doesn't end at your liability limits. If you cause $65,000 worth of damage and have an insurance limit of $40,000, you're personally on the hook for the remaining $25,000 and could be sued for it. The amount of liability insurance you carry is probably the most important choice you make when you write your policy.

Comprehensive and Collision Coverages

If you cause a car accident, or you are unable to collect from the at-fault party, the collision portion of your policy pays to repair your own vehicle. Your car is considered "totaled" when the repair costs exceed the car's value. At that point, the insurance company will tow away the car to the salvage yard and offer you the actual cash value of your car.

To keep your premium costs down when you buy collision coverage, you can raise your deductible to $1,000 or $2,500, but remember you'll have to pay that amount out of pocket before any coverage kicks in.

Comprehensive coverage pays for damages to your car that aren't due to car accidents: Theft, fire, vandalism, natural disasters and hitting a deer are included. Also, your glass coverage comes under the comprehensive portion of your policy. If your windshield cracks, comprehensive coverage saves the day. As with collision coverage, there is a deductible for any comprehensive coverage claim. 

Medical Payments

Medical Payments (sometimes called MedPay) coverage pays for the medical expenses of you and your passengers after an accident. This includes accidents while you're driving your car, while you're driving someone else's car (with their permission), or injuries to you or your family members while you're pedestrians (if the injuries were caused by a vehicle). MedPay will pay no matter who caused the accident, although if someone else is at fault your insurer may subrogate against them, meaning it will seek damages from the other party. 

Uninsured/Underinsured Motorist Coverages

Uninsured Motorist (UM) coverage pays for medical bills if you're struck by someone who is uninsured or if you're a victim of a hit-and-run driver. UM is required in many states.

Similarly, Underinsured Motorist (UIM) coverage kicks in when someone causes an accident but doesn't have enough insurance to cover all the medical bills. In that case, the at-fault person's insurance pays out to its maximum and then your UIM coverage pays for the remaining bills, up to your own limit.

UM and UIM coverage also covers pain and suffering claims. Something important to remember is - in Missouri, it does not cover damage to your vehicle.

The Extras

These may seem like little luxuries, especially when you're adding up your premium bill, but in the event of an accident these additional coverages can save you a bundle.

• Rental reimbursement pays for a rental car when your vehicle is damaged or stolen. Check for the per-day dollar limits and overall maximum to make sure you're getting a good value for your premium dollar.
  

• Towing and labor coverage pays for fees due to road breakdowns.