What are the types of Car Insurance Coverage?

When getting an insurance quote, it’s worth looking at how much it costs to insure your car for each level of cover before you buy.

It’s good to save money, but it’s also good to strike a balance between how much you pay and how much protection you get. Don’t compromise on cover just to save a few quid.

1. Liability Insurance

Liability insurance covers you in the event you are in a covered car accident and it is determined the accident is a result of your actions. Liability insurance will cover the cost of repairing any property damaged by an accident as well as the medical bills from resulting injuries. Most states have a minimum requirement for the amount of liability insurance coverage that drivers must have. If you can afford it, however, it is usually a good idea to have liability insurance that is above your state’s minimum liability coverage requirement, as it will provide extra protection in the event you are found at fault for an accident, as you are responsible for any claims that exceed your coverage’s upper limit. You wouldn’t want to run the risk of having to pay a large amount of money because your policy limit has been exceeded.

2. Collision Coverage

If there is a covered accident, collision coverage will pay for the repairs to your car. If your car is totaled (where the cost to repair it exceeds the value of the vehicle) in an accident, collision coverage will pay the value of your car. .

If your car is older, it may not be worth carrying collision coverage on it, depending on the value. On the other hand, if you have a more expensive car or one that is relatively new, collision insurance can help get you back to where you were before any damage to your car. Note: If you have a lienholder, this coverage is required.

3. Comprehensive Coverage

What if something happens to your car that is unrelated to a covered accident – weather damage, you hit a deer, your car is stolen – will your insurance company cover the loss? Liability insurance and collision coverage cover accidents, but not these situations. These situations are covered by Comprehensive (other than Collision) coverage.

Comprehensive coverage is one of those things that is great to have if it fits in your budget. Anti-theft and tracking devices on cars can make this coverage slightly more affordable, but carrying this type of insurance can be costly, and may not be necessary, especially if your car is easily replaceable. Note: If you have a lienholder, this coverage is required.

4. Personal Injury Protection

While Comprehensive coverage may be something you don’t need to purchase, Personal Injury Protection (PIP) is something you should. The costs associated from an accident can quickly add up, and in order to cover those costs Personal Injury Protection is available. With this coverage, your medical bills along with those of your passengers will be paid, no matter who is at fault for an accident. Note: This coverage is not available in all states.

5. Uninsured /Underinsured Motorist Protection

While state laws mandate that all drivers should be insured, this is unfortunately not always the case. Another issue that can arise is that while a driver may have liability insurance, many states have relatively low minimum coverage requirements that may not be enough to cover all of the expenses of an accident. So, if someone is legally responsible for damages related to an accident, you won’t receive any payment if they do not have coverage or you will receive less than you need to cover the cost of damages if your damages exceed their coverage amount. This is the type of situation where Uninsured and Underinsured Motorist Protection would help with expenses.

Legal defence and claim for damages

If you are insured, you can claim on your insurance.

However, it is your choice whether you claim on your insurance policy. If you make a claim, you may have to pay an excess if you are at fault and may lose your no-claim bonus.

There are two types of insurance for property damage.

    1. Comprehensive insurance covers damage to your own car as well as damage to other cars and property, regardless of whether you caused the accident or not.
    2. Third party property insurance usually only covers damage you do to another car or property. However, if the other driver is at fault and uninsured, you are also able to claim (often up to around $5000) for damage to your car under the little known Uninsured Motorist Extension (UME) term of your third party property policy.

Common defenses generally fall into two separate categories: legal defenses and factual defenses. Legal defenses are defenses that prohibit a claim based on an existing law or rule. The most common legal defense to a car accident injury case is violation of the statute of limitations. Factual defenses are defenses that are dependent upon the actual specifics of the case, and can include defenses of contributory or comparative negligence and failure to mitigate damages.

The most common factual defenses to a car accident injury claim involve fault – unless the accident occurred in a no-fault state. The defense will often seek to limit their liability to pay by showing that the plaintiff was responsible for causing the accident – either completely or in part. Depending on the state in which the accident occurred, there are varying rules on compensating plaintiffs who are, at least in part, responsible for causing the accident. States typically follow one of two rules: Contributory negligence or comparative negligence

Comparative negligence is a factual defense to a personal injury case. In states that have adopted comparative negligence as a valid defense, each party involved in an incident — whether a party to the lawsuit or not — is assigned a percentage of fault based upon the facts of the case. Once the percentage of fault is assigned, local law will usually dictate what percentage of any verdict may be recovered, and from whom.

Contributory negligence can be a crippling factual defense to a personal injury case. In the handful of states that follow this rule, any party that contributed in any fashion to the incident causing injury is barred from getting compensation from other parties.

Going to court

If negotiations fail, your next resort is court action. Think carefully before taking court action. If you lose, you may have to pay the other side’s legal costs. Even if you win, you may not be able to recover any money. Also, court action takes time and can be stressful. If you do start court  action, you will need to know the name and address of the other party or parties. This is usually the driver but can also include the owner.  Court action for property damage must usually start within six years of the date of the accident. Drivers under 18 must similarly claim within six years  from when they turn 18.

The Local Court is divided into two divisions:

  • Small Claims Division for claims up to $10,000.
  • General Division for claims over $10,000 and up to $100,000.

The person who starts legal proceedings is called the plaintiff. The person who is being sued is called the defendant.