Being in a car accident, whether it’s your fault or not, is incredibly stressful. You may be shaken up by the accident itself but also wondering what’s next.
If you’re not at fault in an accident and you live in a no-fault state, then your personal injury protection covers your injuries.
If your injuries are more serious than what’s covered by your insurance, you can then directly sue the at-fault driver.
If you live in an at-fault state, then the driver who is atfault or negligent should have coverage visa their bodily injury liability that pays your hospital bills.
Twelve states currently are no-fault, and the other 38 and Washington D.C. are atfault.
An at-fault state is also called a tort state.
The idea here is that the driver causing an accident compensates the other party for their losses via an insurance claim or sometimes out-of-pocket.
With those things in mind, sometimes, just as much as knowing what your insurance covers is important, it’s just as important to know what’s not covered.
Knowing what car insurance doesn’t cover can help you make sure you’re covered in other ways.
What Car Insurance Never Covers
Car insurance doesn’t cover general maintenance, damage caused by wear and tear, or intentional damage. Intentional damage can in some cases, include DUI.
Your insurance won’t cover damage exceeding the limits of your liability policy, nor does it protect belongings stolen from your car.
What Car Insurance Probably Won’t Cover
Above are the thing that won’t be covered, and below are things that likely won’t be covered by your insurance:
- Custom equipment and parts: Your liability, collision, and comprehensive insurance typically won’t cover anything that’s customized, like your sound system or specialized lighting. If you need coverage for those things, you’ll probably need to shop for add-on coverage.
- Your lease or loan if your car is totaled: If you owe your lender more than what it’s worth when it’s stolen or totaled, your insurance company only covers the replacement cost. Then, you still owe what’s leftover unless you have gap insurance. A gap insurance policy covers that dollar amount left between what your vehicle is worth when you’re in an accident and what you owe on your loan.
- Driving for delivery or rideshare: If you’re a delivery or rideshare driver, you need to be careful about confirming you have insurance coverage. Any time you’re using your vehicle to make money, you may not have coverage under your personal insurance policy. You can purchase a policy specifically for rideshare to ensure you’re covered.
- Mechanical issues: Something like a transmission failure probably isn’t covered by your standard insurance policy. You can buy mechanical breakdown insurance.
- Other drivers: If you have a friend or family member driving your car and there’s an accident, depending on your policy and how you’re related to the person driving, then you might not have full coverage. Some insurance companies will only cover an accident if the person driving is in your policy. Others will cover it only if you were in the car with them. Some insurance companies protect family members, but not friends, and then still yet, some policies will cover any licensed driver.
So, What Will Your Insurance Cover?
The majority of car insurance policies will include several types of coverage, each of which is designed to pay for something different.
Every policy has a limit. The limit is the max the policy will pay. You can determine your limit based on the level of coverage you need and how much you’re going to spend.
The higher your limit, the more expensive, but the less financial burden you’re likely to face if you are in an accident.
At a minimum, you have to get the amount of coverage required by your state. Minimum requirements vary.
Primarily, most states require liability insurance. This covers the expenses that you might have to pay if you’re atfault for an accident.
Some states require personal injury protection (PIP). PIP or MedPay are designed to cover your medical expenses if you’re in an accident, regardless of fault.
There’s also uninsured and underinsured motorist coverage, which is for damage you might sustain from a driver without insurance or without enough insurance to fully cover that damage.
Other types of insurance that may not be required but that are available include:
- Comprehensive coverage: This covers the cost of repairs for things that aren’t within your control. For example, if you have comprehensive coverage, it may include weather-related damage, theft and vandalism. The basic idea of comprehensive coverage protects you if your car is damaged by anything other than an accident.
- Collision: Often optional, collision covers damage to your vehicle after an accident no matter who’s at fault, and it also will cover damage from potholes. Collision and comprehensive usually include a deductible. Deductibles are the amount you have to pay before your insurance kicks in and begins to pay. The higher your deductible, the lower your premium.
- Gap insurance: This was talked about above a bit. Your car, when you buy it new starts to lose value right away. Often, cars lose their value faster than loan balances will decrease. If you’re in an accident and total a new car that you haven’t paid off, gap insurance can be extremely valuable. Gap insurance will cover the difference between the value of your vehicle and how much is owed on your loan, and sometimes a leasing company will require this.
Beyond what’s above, you can add to your car insurance policy even more.
For example, you might get new car replacement insurance which works somewhat like gap insurance.
There’s full glass coverage if your window or windshield is chipped or broken, and there’s also roadside assistance coverage if you’re stuck on the side of the road.
It’s helpful to have a general understanding of how insurance works and what’s covered versus not.
You want to ensure you have enough protection, but not so much that you’re overpaying based on your needs.