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Is My Car Insured?

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Thousands of people ask this very simple question every day. Is their car insured? To answer that question we first need to understand what is and what is not covered in car insurance and what do all of those terms mean.

What Is Liability Coverage?

Liability covers 3 things. They are:

  • Medical expenses to other people
  • Damage to other people’s vehicles
  • Damage to other people’s property

How To Tell How Much Liability Coverage You Have

If you look at your car insurance documents you should see some numbers. They might read:

  • $25,000/$50,000
  • $50,000/$100,000
  • $100,000/$300,000
  • $250,000/$500,000

In the first example $25,000 is the max the insurance company will pay for each person’s medical expenses. The $50,000 is the total amount of money the insurance company will pay per accident in medical expenses.

What If You Exceed Those Limits?

What happens if you get into an accident that is your fault and you have the $25,000/$50,000 limit and you hurt 1 person. That persons medical bills are only $10,000. Then your insurance company will pay 100%

However, if you have those same limits and that 1 person’s medical expense total $75,000. Then your insurance will only cover $25,000 and leave you to pay the $50,000 by yourself.

And That’s Not All…

What if you hurt more than one person per accident. If 4 people are hurt medical bills can easily go over $200,000. With those same limits you would be responsible for $150,000 or more.

What About Your Property Damage Limit?

Your property damage limit is usually listed separately. That can have values of:

  • $10,000
  • $25,000
  • $50,000
  • $100,000

Remember this only covers the property of other people’s cars or property. If you think that your car is only worth $3,000 so you only need the $10,000 limit, you are wrong.

The cost of new cars are usually way over $10,000 and if you hit one of those you could be charged the difference.

What Does This Mean For You?

If you get into an accident that’s your fault, it’s possible that you will have to pay for expenses that you can’t pay for. You might think that since you don’t have the money then you don’t have to pay. Wrong.

The fact is that if you get a court judgment against you, you can have up to 66% of your gross income taken from you. That judgment can stay in effect until it is paid off.

Filing for bankruptcy won’t help either. These type of judgments don’t go away just because you file for bankruptcy.

What If It’s Not Your Fault?

What if you get into an accident that’s not your fault and the person who hits you does not have enough coverage to cover the expenses. This is where the uninsured/underinsured motorist coverage comes into play.

One’s Thing’s For Sure…

You are a lot safer if you have uninsured/underinsured insurance. Both pay for your expenses that happen in the event of an accident that’s not your fault. They do not cover the other drivers.

Uninsured pays when the person at fault has no insurance. Underinsured pays when the person at fault has insurance, but not enough to cover your expenses.

What Are Medical Payments Then?

You may think if I have both liability and uninsured/underinsured why would you need medical payments?

Medical payments pays no matter who is at fault. However, medical payments cover you even if you are just a pedestrian that gets hurt in a car accident. It also covers your family members.

Don’t Forget About Comprehensive Coverage

Comprehensive coverage covers damage to your vehicle other then damage that happened in an accident. Instead of selecting the max that it will pay you choose how much you want to pay for a deductible.

Once you meet your deductible, the insurance company will pay for the rest up to the value of your car.

What Does Comprehensive Coverage Cover?

Comprehensive coverage covers:

  • Glass
  • Theft
  • Weather Damage
  • Falling Objects
  • Vandalism
  • Flood
  • Impact with Animals

If you have a loan or a lease, the lien holder may require that you have comprehensive coverage.

What Is Collision Coverage?

Collision coverage is just that. It covers the value of your vehicle if you are involved with a collision. The collision could be with another vehicle or an object.

Collision coverage acts the same way that comprehensive does in that you only pay an deductible and the insurance company pays the rest up to the value of your car. You must have comprehensive coverage in order to have collision coverage.

What is GAP Coverage?

GAP or Guaranteed Auto Protection covers the difference in price between the actual cash value of your vehicle and the amount of the loan.

What does that mean? Let’s say that you owe $15,000 on your vehicle. However, your car is only worth $10,000. If you get into an accident and your car is totaled. Your collision would only cover up to $10,000 minus your deductible. GAP Coverage would cover the extra $5,000 minus your deductibles.

Note that GAP Coverage also has a deductible that must be met before anything is paid out.

Decide For Yourself

If you feel that you do not have enough insurance or you still don’t know, feel free to contact us. We are the best insurance agency.

We have a friendly staff who are ready to help you out with your needs. We can provide you with a free and no obligation quote.


Below are a list of resources that were used to write this article:

Thank you to Travelers for providing this information.

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