Insurance Coverages for Beginners

Use Our Beginners Guide to Learn all About Basic Insurance Coverages! 

 

Oftentimes in insurance there are confusing terminologies  and coverages that seem difficult to understand. Coverages and limitations will often vary depending on the type of policy you have and what carrier you choose. Even so, it's important to know the basic insurance coverages so you don’t feel completely lost if you have a claim or even just when reading over your declaration page. 

 

Continue reading for a breakdown of the basic coverages provided in typical auto and homeowners policies.

 

Auto Insurance 

When it comes to auto insurance, it’s important to know that depending on where you live,  some coverages will be mandatory, and some coverages will be optional. Mandatory coverage-minimums will vary depending on the state you live in.  For example, New York State law requires that you carry a minimum amount of liability insurance of $25,000 for bodily injury to one person, $50,000 for bodily injury to all persons, and $10,000 for property damage in any one accident.  This would mean your maximum coverage for bodily injury liability for one person injured in one accident would be $25,000 and $50,000 total for all persons injured in one accident. Mandatory "no-fault" or Personal Injury Protection coverage of $50,000 is also required in New York State. 

 

Frequently Required Coverages:

Depending on the state you live in, you may be required to purchase the following coverages: 

• Bodily Injury Liability — This coverage can help pay for the costs associated with injuries and death that you cause while driving your car or a rental car. It’s important to note that this kind of coverage only applies to someone else’s medical bills, not your own. 

• Property Damage Liability — This coverage can reimburse others for damage that you or another driver operating your car causes to another vehicle or property, such as a fence or building front. 

 

• Uninsured Motorist Coverage — This can provide coverage to you, the insured and passengers within your vehicle if they are injured in a motor vehicle accident, and the other car involved either does not have insurance or does not have coverage limits high enough to fully compensate our insured for the injuries sustained in the accident.  In those instances, you can potentially pursue full recovery directly from your own insurance policy. 
  
  

• Personal Injury Protection (PIP) — PIP, also known as “ no fault” insurance, can cover the costs for medical expenses for injuries to you or your passengers, regardless of who is at fault. It can also cover lost wages and other related expenses if deemed appropriate. You can also purchase Medical Payments Coverage in addition to the state mandated PIP coverage to increase your protection.  

 

Optional Coverages 

The following coverages can be added to your auto policy by choice:

• Comprehensive — Comprehensive coverage, otherwise known as “Other than Collision” can provide payment against theft and damage caused by an incident other than a collision. For example, damage caused by flood, vandalism, hail, fire, or falling objects can all be covered under comprehensive. 

• Collision — Collision can help reimburse you for damage to your vehicle as a result of a collision with another vehicle or object. It’s important to note that while collision coverage will not reimburse you for mechanical failure or normal wear-and-tear, it will cover damage from potholes or damage from a rollover. 

• Full Glass Coverage — Damage to windshields is a common occurrence, so the purchase of full glass coverage can be a good investment. This type of coverage helps pay for damage to your windshield and the other glass windows in your vehicle. 

 

What is Gap Insurance?

When leasing or financing a vehicle, lenders may require you to purchase collision and comprehensive coverage. It’s important to know that comp and collision will only cover the car’s actual cash value, meaning it may not cover the amount you paid for the car in full if it is stolen or totaled. To ensure there is no “gap” in financial recovery,  you might consider purchasing gap insurance to pay the difference between the amount insurance pays and the balance on your loan.

 

Homeowners Insurance 

Home insurance is not mandated by the state, but it will be required if you choose to take out a mortgage when buying a home. Home insurance tends to be a little more complex than auto insurance as there are more choices to make regarding policy type and coverage. An agent can be an excellent resource when it comes finding a policy that fits your needs. 

 

What Does Homeowners Insurance Cover? 

Homeowners insurance covers much more than just your home. Along with the protection of your home itself, policies will typically cover personal belongings as well as certain expenses that may come up after a loss. Liability, medical payments, and additional living expenses can all be covered to the limits set in your policy. 

 

What are the Different Types of Homeowners Insurance? 

Different insurance carriers will offer several different standardized policies which contain varying types and amounts of coverage. Depending on the type of home you purchase and your mortgage requirements, you can choose a policy that adequately fits those needs. This is something that you may want to review with your insurance agent, who can provide you details regarding coverage limits depending on the form and carrier you choose.

 

What Do These Coverages Mean Exactly? 

Here is a breakdown of the coverages offered in a standard homeowners policy:

• Coverage A- Dwelling Coverage: With a standard homeowners policy, the dwelling coverage pays to repair or rebuild your home’s physical structure if there is damage in the event of a covered loss. 

• Coverage B- Other Structures: Your home policy will typically cover other structures on your property such as fencing, sheds, a detached garage etc. 

• Coverage C- Personal Property Coverage: This coverage protects your belongings, for example clothing and furniture. 

• Coverage D- Loss of Use Insurance: In the event of a covered loss, where your home has been made uninhabitable, this coverage can help pay for the costs of additional living expenses, should they be deemed necessary. Hotel costs, food, and extra mileage to and from work are all examples of what could be covered.

• Coverage E- Personal Liability Insurance: Personal liability coverage can help you pay for your legal expenses (in the event that you were sued) for another person's injury or property damage loss. This coverage can apply regardless of whether or not you are ultimately found liable.

• Coverage F-Medical Payments Insurance: This coverage can help pay for a visitor's immediate medical expenses if they happen to become injured while on your property, regardless of who is at fault. 

 

Understanding insurance in general can be tricky, let alone the details of your specific policy. This is why it is essential you have a working knowledge of the associated coverages and terminologies.  You might also be interested in learning more about auto and homeowner policies with NYCM or the discounts you may qualify for. Click the link below to contact an agent!