Your auto insurance plan is a collection of policies that cover various things in the event of an auto accident. It’s illegal to drive without auto insurance and the bare minimum you must hold is a liability insurance policy.
Wall Street Journal has laid out other various policies and what is covered under each one. Some drivers may need more insurance than others so it’s incredibly important to review your policy before choosing one.
• Liability coverage – These policies help cover liability and expenses when you’re at fault in an accident. The money will go to the people you hit, but it won’t cover the people in your car.
• Bodily Injury Liability (BIL) – This policy pays for the medical expenses of people injured in a crash in which you’re at fault. You’ll often see BIL policies described as a “20/50” policy or a “100/300” policy. These numbers describe the maximum dollar amount the policy will pay for a single person’s injuries and the maximum for all the injuries sustained by all the occupants of the other car. For example, a 20/50 policy will pay a maximum of $20,000 for a single person’s injuries, and up to $50,000 total for the injuries of everyone in the car you hit.
• Property Damage Liability – This policy pays for damage done to the other car if you’re at fault in an accident. Property liability is sometimes referred to alongside BIL as a third number, so a 20/50/10 liability package will cover up to $10,000 for damages to the other car.
The following policies cover you and your card in an accident:
• Personal Injury Protection (PIP) – This covers your and your passengers’ medical expenses after an accident. If you lose time at work because of your injuries, this policy may also cover lost wages.
To see the other types of policies including uninsured motorist, collision and comprehensive coverage, check out this link: http://guides.wsj.com/personal-finance/insurance/how-much-car-insurance-do-you-need/
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