What’s in an auto policy?

Information on what you’re really covered for on that thing you pay for every year.

You’ve heard this — or said this — before: insurance is confusing. It’s an industry with specialized workers from agents to underwriters to adjusters who understand how coverage, claims, and risks work. As a client (or an “insured,” as you would be called by your agent), you aren’t necessarily expected to understand all the nuances of a complex industry such as this one. After all, that’s why you work with an agent; you trust him or her to provide you with the proper coverage for your home and automobiles.

What’s more important for individual policyholders to understand is the basics of what is on their home or auto insurance. The dissemination of this knowledge can happen through an independent agent or a quick Google search, but the information is infinitely valuable.

Luckily for you, if you’re buying your first policy or you’ve been with the same company for 20 years, we’ve done a little bit of work to help explain what is included on a basic auto policy.

• Bodily Injury Liability: Bodily injury liability will cover you in the event that you are liable for an automobile accident. Generally, this coverage will be in the form of $100,000 per person/$300,000 per occurrence. In Illinois, the minimum limits are $25,000 per person/$50,000 per occurrence. At Eckburg, we never recommend going below the $100,000/$300,000 limits, and often recommend even higher limits. Liability can also come in the form of a combined single limit of $300,000 or $500,000. The important thing to remember here is that bodily injury liability is protection for others when you are at fault. The coverage will pay for expenses related to injuries someone experiences due to an auto accident that is your fault.
• Uninsured/Underinsured Motorist Liability: This may be the most important coverage that people do not think about. While bodily injury liability covers others’ injuries when you are at fault, uninsured/underinsured liability covers you when others are at fault. Let’s say, for example, you are in an accident and the other driver is at fault. As a result of the crash, you broke your wrist and will need surgery and rehab that will cost in excess of $75,000. However, the at-fault motorist has a limit of $50,000 on his or her policy. This leaves $25,000 that this motorist’s insurance company is not going to pay. In this case, your uninsured/underinsured motorist liability will pick up the remaining amount. These liability limits usually mirror your bodily injury liability limits and are standard on any Illinois policy.
• Medical Payments: Medical payments are similar to your liability coverage. Medical payments help cover health insurance deductibles and co-pays, ambulance and technician fees, and doctor or hospital visits that occur as a result of a car accident. These will kick in for both you or your passengers, regardless of who is at fault for a particular incident. At Eckburg, we generally recommend a $5,000 medical payments limit. You can always go higher than this, too; often up to $50,0000.
• Comprehensive: Comprehensive coverage is protection for your car when it gets damaged due to anything other than a collision. This could include a can of paint falling on the hood of your car in the garage, or hitting a deer when it runs into the road. If your car is outside and hail cracks the windshield, this would also be covered. Comprehensive coverage is distinguished by a deductible, which you as a policyholder would pay into a claim before the insurance company would pay. The deductible can be as low as $100 or as much as $1,000, depending on your preference. The lower the deductible, the higher the premium you will pay. Many companies also offer a $0 glass deductible, which will cover you fully without a deductible for any glass-related claims.
• Collision: Collision coverage is also distinguished by a deductible, such as $250 or $500, and covers your vehicle in the event of a crash.
• Towing: Coverage for towing is exactly what you think it is: if your car breaks down, they will get your car to a body shop. With most companies, you can have $75-100 of coverage for a very low amount of premium each year. Generally, you pay the towing amount up front and the company will reimburse you after providing a receipt. No deductible applies. Some insurance companies work with specific towing companies in your area and provide you with their contact information on your insurance cards. Towing is often not included on a policy, but easily added.
• Extra Transportation Expense/Rental Car Coverage: In case your car is damaged during an accident, this coverage will provide you with a rental vehicle for a certain amount every day for a month. The most common limit is $30 per day/$900 maximum (essentially a month of rental coverage). This number can be higher or lower, but this coverage, like towing, is usually not automatically included on a policy. A good agent will make sure they quote you with this coverage. Most companies require that you have collision coverage to include extra transportation expense.
• Additional coverages: Most companies, and several that we carry at Eckburg Insurance Group, have other “add-ons” that are not standard on a policy but may be beneficial to add. This can include coverage for a pet if it is injured in a crash, lock replacement, additional rental car limits, or even reimbursement for your expenses (such as food and lodging) if your car break down during long-distance travel. Ask your agent about some of these different add-ons if you think you might benefit from them.

Hopefully, this gives you an idea of what exactly you get when you sign an application or send a check to your insurance company every year. The more you know, the better prepared you are to discuss different options with your agent or in the event of a claim.

Eckburg Insurance Group is the largest home and auto insurance provider in northern Illinois. We can cover all your home, auto, business, and life insurance needs. Our dedicated staff, made up almost entirely of men and women who were raised in our community, works tirelessly every day to keep you protected. Call us today at (815) 877-4100 or click here for a quote!