Broadly, car insurance policies cover six high risk categories, the premium payouts are based on the pricing for each of these separately.
• Accident or collision cover
• Bodily injury liability
• Property damage liability
• Uninsured motorists’ coverage
Accident cover or collision cover – provides accident and injury coverage for policy holder if he sustains injury while travelling in an insured vehicle, along with damages to the insured vehicle.
Bodily injury liability or third party legal liability – a driver may be legally required to pay compensation if his car causes injury to a third person or results in the death of a third person. Most car insurance policies provide cover against legal liabilities that are caused by accidental damages to third person and property. The coverage limit for injuries or death is not fixed and depends on a case-to-case basis.
Comprehensive – some insurance policies cite this as ‘Vehicle Damage’ which includes natural calamities. Comprehensive generally excludes accidents but includes theft, and damage to car from natural calamities such as earthquake, explosion, fire, flood, hurricane, landslide, lightning, falling objects etc.
Medical – also known as Personal Injury Protection (PIP), this covers medical treatment of injuries to the occupants of the insurance holder’s car at the time of an accident. It can extend to include medical or hospital bills, lost wages and some other clauses which may vary.
Property Damage Liability – provides cover against damage by the policy holder to third party property. The coverage for property damage is mostly defined.
Uninsured motorists’ coverage – this covers treatment costs for the insurance policy holder from injuries sustained through accident or collision with an uninsured driver or vehicle. Although not all state insurance rules specify or require that car owners must have insurance to cover all these risks, they recommend minimum liability cover for bodily or personal injury protection and property damage.
Other elements that are included as add-on risks depending on need or request from policy holders are:
• Auto replacement
• Rental car coverage
• Towing coverage