What Your Auto Insurance Really Covers

In the United States if you own a car you need auto insurance to be legal and avoid the slammer. Each state has their own minimum coverage for what insurance coverage limits you need. Each insurance company will give you the usual sales pitch about how cheap their insurance is and why they are better than other companies. But have you ever read your auto policy? Most likely not. Here is a quick “Andre Fact” 99% of people do not read their policy. The other 1% works in the insurance industry and are paid to read it. How do I know this? Because I have been working in the insurance field for the past five years and never meant one person who read the policy. I understand why no one reads it, it is boring and I couldn’t imagine reading it if I wasn’t paid for it.

Often times I worried for the general public because you need to know what you are paying for. That is what led me to blog about this topic and my goal here is to give my readers more knowledge and insight into their auto insurance. And don’t worry story time is included!!!

Coverage you need to be legal:

Bodily Injury – This coverage applies to any injuries you cause to others a car accident.  For example: Bruce hits Diana in a car accident. Diana ends up having $35,000 of medical expense after the accident.  Lucky for Bruce he has $50,000 (per person) / $100,000 (per accident) coverage to cover him and his insurance takes care of him in this case. But let’s say that Bruce had limits of $25,000/$50,000. His insurance company would only pay $25,000 for the claim since only one person was involved. Bruce is on the hook for the other $10,000 to take care of Diana’s medical bills. Lesson here is to make sure you have enough coverage so you don’t get put on the hook.

Property Damage – This coverage pays for the actual vehicle and any other property you damage with an auto vehicle. If you happen to drive in the city with a lot of nice and expensive cars you may want to increase your property damage coverage. Most cars tend not be expensive to fix but if you hit a BMW, Lexus, Mercedes or heaven forbid a Lamborghini your coverage will be used up just for the bumper.

Optional Coverage – unless your vehicle lien-holder requires it:

Comprehensive Coverage – This coverage pays for damages to your vehicles that aren’t caused by you. I usually come across the typical claims like theft of a vehicle, vandalism, hitting an animal on the road or storm related damages. Essentially any damage to your vehicle that wasn’t caused by you or another vehicle is covered.

Collision Coverage – This coverage pays for your vehicle damages when you, the driver are involved in an at-fault accident that caused damages to your car. For example: Diana hits another vehicle and damaged her car in the process. In this situation both vehicles would be covered up to the limits. Also, a good rule of thumb is the insurance company will pay the less expensive option of fixing or replacing the car

Gap Insurance – This coverage is used to cover financial gaps with vehicle loans when your vehicle is totaled. For example: Clark is driving his new car that he spent $15,000 for to purchase and makes his monthly payments consistently. Unfortunately Clark totals his vehicle and it needs to be replaced. His insurance company pays for the vehicle. Clark receives a check for $12,000 and he is outraged to learn that insurance only pays for the value of the vehicle. However, Clark is fortunate because he has Gap insurance and it covers him for the extra $3,000 he needs to pay off his car loan. If Clark didn’t have this coverage he would still need to pay off his car loan.

Medical Payments – This coverage is used for when you are in accident, whether it’s your fault or not, and you need to get checked at the hospital. I recommend this coverage because when you are hurt in an accident that isn’t your fault, you have to depend on the other insurance company. And to put it basically some insurance companies may not be as quick to get your hospital bill paid. Look into this coverage so you don’t have to wait around in pain.

Uninsured/Underinsured Motorist Coverage –This coverage comes into play when you are hit by another vehicle that:
  1. Does not have insurance
  2. Does not have enough insurance or
  3. Drives off in a hit-and-run

I always recommend this coverage to people who drive in high-populated areas as the amount of people without insurance and basic limits is frightening at times.


From working in the insurance industry I have learned a great deal about insurance coverage and love to help others understand it. Feel free to email me if you have any additional questions.

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