Components of an Automobile Insurance Policy

Depending on the state, automobile liability insurance policy may contain some or all of the following:

  • Bodily Injury Liability: The insurer will pay damages when other persons are injured or killed in an accident for which the insured are at fault.
  • Personal Injury Protection (PIP): The insurer will pay for the insured’s injuries and other related damages to the insured and to passengers.
  • Property Damage Liability: The insurer will pay damages when the property of other persons has been harmed or destroyed by the insured’s vehicle and the insured is at fault.
  • Collision Coverage: The insurer will pay for damages to the insured’s own vehicle, when the insured is at fault. If the insured’s vehicle is financed, the loaner may require the insured to maintain collision coverage on the vehicle.
  • Comprehensive Coverage: The insurer will pay for damages to the insured’s automobile caused by fire, theft, vandalism, acts of God, riots, and certain other perils. If the insured’s vehicle is financed, the loaner may require the insured to maintain comprehensive coverage on the vehicle.
  • Uninsured/Underinsured Motorist (UM/UIM) Coverage: The insurer will pay for injury or death to the insured and the insured’s passengers if caused by an uninsured or underinsured tortfeasor or a hit-and-run motorist. In some states, the insurer will also pay for damage to the insured’s vehicle. An uninsured at-fault tortfeasor may be sued and his or her personal assets attached to satisfy any judgment.

Inside Components of an Automobile Insurance Policy