Last week, we started a mini blog series on the nuts and bolts of auto insurance policies. Every policy comes with mandatory minimum coverage. Beyond the basics, extras and options are also available. Not everyone needs expanded protection, but for some, they may be a wise investment. Our next two posts will provide a snapshot of what’s available – for both the vehicle and its occupants.
Flexibility and Control
For standard coverages discussed in the Part 1 post of this series, as well as for the extras we explain further below, policyholders have the power to exercise choice. For example, to reduce premiums or increase protection, a motorist may decide to opt for:
- An increased deductible: the portion you pay first, before insurance covers the rest of the claim’s value
- Increases in mandatory minimums: such as increasing from $200,000 to $2 million in coverage for claims arising from lawsuits under third-party liability.
- Extra coverages and endorsements: for types of coverage not included in a standard policy
Let’s look at a few of these extras for the vehicle.
Extra Coverage for Loss and Damage
Every standard policy comes with Direct Compensation – Property Damage (DC-PD) coverage. This part of the policy pays for damage or loss to your car, but only under certain conditions – one of which is the involvement of at least one other at-fault vehicle. So, if you hit a tree, the damage wouldn’t be covered under this part of the policy.
In such cases, and others where the DC- PD conditions are not met, claims for damage to your vehicle can be made if you purchase such optional coverages as:
- Collision or Upset: covers damage in rollovers or collisions with objects, ground surfaces or other vehicles.
- Specified Perils: covers damage involving a variety of perils, such as fire, riot, sinking in water, among many others.
- Comprehensive: covers damage from incidents in which your car is not in motion, including specified perils and other causes such as vandalism, theft and flying objects.
- All Perils: covers everything under Collision/Upset and Comprehensive, but also for theft by household members or employees, such as a mechanic or service person handling your car.
Still more options exist. Our next post in this series will discuss a few of the extras aimed at protecting you and your car’s occupants in the event of an injury.