Insurance Coverage Policies Explained: What You Really Need
When it comes to your auto insurance policy, understanding all the coverages is key. Bankrate has created a guide to help you make sense of what your policy covers.
Your policy starts with a
Declarations page(s). This lists your coverage period, limits, deductibles and
premium. It also identifies your designated drivers.
Medical Payments
Medical payments coverage, also
known as med-pay, helps pay for your own and your passengers’ medical expenses
after an accident, no matter who is at fault. It’s usually less expensive than
liability insurance and can help cover your deductible if you have a
high-deductible health plan.
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You can choose a specific amount
of med-pay when you buy your policy, typically up to $100,000 per person. While
it’s not required in all states, it may be worth adding if your finances can’t
afford to shoulder unexpected medical costs or you frequently drive with
passengers.
PIP is a similar form of car
insurance that is mandated in some no-fault states. However, whereas PIP covers
more expenses and can help you get medical care even if you’re not insured or
have a high-deductible health plan, it generally offers lower coverage limits.
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Both med-pay and PIP are
supplemental to your health insurance, which must be used first before the
med-pay or PIP benefit kicks in. It’s important to remember that removing this
type of coverage will result in higher premiums. This type of coverage is very
affordable and could save you a lot of money in the long run, particularly if
you have a family member with high medical expenses or a high-deductible health
plan. If you’re not sure if medical payments or PIP is right for you, talk to a
Great Northwest representative about your options. They can help you find the
right coverage for your lifestyle and budget. They can also review any
Endorsements or Riders added to your policy, as these will affect the terms of
your coverage. This is a good time to make sure your coverage is up-to-date and
accurate.
Uninsured Motorist Coverage
Uninsured motorist coverage is a
type of liability insurance that pays for injuries and damages you sustain when
hit by an uninsured or underinsured driver. This coverage is offered by many
insurers in the form of a standalone policy or added to the standard liability
coverage in your car insurance policy. It can be purchased in increments of
$5,000, and most drivers choose limits that closely mirror the amount they have
selected for their liability coverage.
Some states require that you have
a minimum amount of UM/UIM, and it can be an inexpensive addition to your
policy. However, if you’re in an accident with an uninsured or underinsured
motorist and the additional payout from UM/UIM exceeds your insurance limit,
you may have to pay out-of-pocket for your expenses. In that case, it would be
well worth the cost to increase your limit to a level that more closely matches
your car’s value.
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