Understanding Your Car Insurance Policy

While we all have it (at least we are supposed) what do all those terms on your car insurance policy actually mean? What does the policy mean when it says per person/per incident? What is med pay? Having an understanding of these terms will help you to understand what coverage you have should and when you need it.

Bodily Injury

The first coverage that typically appears on what is referred to as a declaration page (the document that lists out your coverages) is Bodily Injury. This coverage pays an injured party or parties should you be responsible for their injuries.  The minimum coverage in Alabama is $25,000 per person and $50,000 per occurrence (of course these limits can be increased).  What per person and per occurrence means is that should you be the cause of an accident with injuries, your insurance policy will pay a single individual up to $25,000 for their injuries, and if there are multiple people injured only up to $50,000 regardless of the number of people injured or the severity of the injuries. A minimum policy may leave you vulnerable to having to possibly pay out of pocket should the damages caused by you be more than your policy limits.

Property Damage

This coverage is pretty straight forward, it simply pays for any damage you cause to another person’s property up to the policy limits. Once again, a minimum policy may leave you vulnerable to having to possibly pay out of pocket should the damages caused by you be more than your policy limits.

Medical Payments

This is an optional but important coverage that can help pay for medical expenses regardless of who is at fault. Often this coverage can help pay for out-of-pocket expenses that your primary health insurance does not cover.

Uninsured and Underinsured Motorist Coverage

This is arguably the most important coverage on your policy. Uninsured and Underinsured motorist coverage, commonly referred to as “U-Coverage,”  can pay for injuries you or your passengers sustain when the driver at fault does not carry sufficient bodily injury coverage or no coverage at all. Just as with bodily injury coverage U coverage has coverage per person and per occurrence coverage. Further, while U Coverage is not mandatory you must waive this coverage in writing when first purchasing your policy (waiving this coverage is strongly discouraged).

Other Coverages

There are a few other types of coverages that are optional such as rental coverage should your vehicle be undrivable and collision which pays for damage to your vehicle regardless if you are at fault.