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A Layperson’s Guide to Auto Insurance Coverage Options
If you haven’t taken a look at your auto insurance policy in a while, now’s a good time to revisit it and make sure you have the coverage you need. Insurance can get complicated, so this month, I’m laying out the basics of six types of coverage.
First, there are two kinds of coverage required by the state:
- Bodily Injury Liability is mandatory coverage that helps pay for another party’s injuries if you are responsible for an auto accident. In the state of Georgia, the minimum required bodily injury liability is 125,000 per person and 150,000 per accident.
- Property Damage Liability is also mandatory. Whereas bodily injury helps pay for medical bills due to injury, property damage coverage helps pay for damage to their vehicle when you are at fault for the accident. Georgia requires a minimum property damage liability coverage of 125,000 per accident.
Georgia also strongly recommends uninsured motorist coverage, though auto policyholders are allowed to reject this coverage.
- Uninsured/Underinsured Motorist Coverage (UIM) helps protect you in the event that you’re hit by an underinsured or uninsured driver. While it is illegal to drive without the minimum insurance coverage outlined above, people still do it. Similarly, if you’re hit by a driver who only has the minimum required coverage, your repair or medical bills may exceed what their policy will payout. In this case, UIM will help cover the remaining costs.
The state recommends $25,000 per person and $50,000 per accident in UIM bodily injury coverage and $25,000 in UIM property damage coverage (this also has a deductible). I’ve written about UIM in previous newsletters, and I would highly recommend that all drivers add this to their policy. It’s often a nominal monthly increase to your bill, but it can really pay off if you’re in an accident with a driver who doesn’t have adequate insurance coverage.
The final three types of coverage you may be offered are not mandatory in Georgia, but each has its merits. Note that if you are leasing your car or paying on a car loan, your lender may require them.
- Comprehensive Coverage helps cover weather damage (e.g., hail or fire), as well as vandalism and theft. If you have comprehensive coverage, you should check your policy or talk it over with a representative to make sure you know exactly what’s covered, if there are any exceptions, and what your deductible is. That’s the amount you have to pay before your insurance will start paying out.
- Collision Coverage helps pay to repair your car if you collide with another vehicle or an object, even if the accident was your fault.
- Medical Payments Coverage helps you pay for medical costs resulting from injuries due to a collision. It often covers you and any passengers who are in the insured vehicle at the time of the accident.
It’s good to have a solid understanding of each of these types of coverage and to ensure your policy offers the protection you need. While $25,000 may seem like a lot to cover bodily injury, those who’ve been injured in an auto accident know firsthand that medical bills can quickly add up. In addition to treatment immediately following an accident, if you need surgery, physical therapy/rehabilitative services, or sustain serious injuries that require many follow-up and specialist appointments, you’ll be happy that you chose more than the minimum coverage.