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Car insurance is a necessity for every driver, offering crucial financial protection in case of accidents, theft, or damage. Yet, understanding the intricacies of your car insurance policy can often feel like deciphering a foreign language. From deductibles to coverage limits, and exclusions buried in the fine print, it’s easy to get lost in the details.

There can also be confusion about what the minimum coverage requirements are for car insurance and what additions would be in a driver’s best interest to include. Here’s a comprehensive guide to help you navigate and understand your car insurance policy.

What are the Different Auto Coverage Types?

Car insurance policies typically consist of several types of coverage, each serving a different purpose. You can purchase different amounts of coverage based on your needs.

Personal Injury Protection (PIP)

This pays medical bills, lost wages, and other nonmedical costs for you and your passengers. All auto policies in Texas include PIP coverage unless you sign a written rejection. It also pays if you’re hurt while a passenger in someone else’s car, while walking, or biking.

Medical Payments (Med Pay)

This is similar to PIP but it only pays medical bills for you and your passengers. It also pays if you’re hurt while a passenger in someone else’s car, while walking, or biking.

Liability Coverage

If you caused the wreck, this pays for damages to the other driver, his or her passengers, as well as your passengers. It covers injuries as well as property damage. Injuries can include medical expenses, physical pain, and lost earnings. Property damages can include repairs, replacement, rental charges, and diminished value. Texas law requires you to have at least $30,000 of coverage for injuries per person, up to a total of $60,000 per accident, and $25,000 of coverage for property damage. This is called 30/60/25 coverage. Minimum limits may be too low if you cause a multi-vehicle wreck, the other driver’s car is totaled, or there are serious injuries. It is important to consider carrying more than the state’s minimum limits. If you don’t have enough liability coverage, you might have to pay out of pocket or you may get sued.

Collision Coverage

This pays to repair or replace your car after a collision, even if the wreck was your fault.

Comprehensive (Other Than Collision) Coverage

This pays for something that is not a collision like if your car is stolen or damaged by fire, flood, or vandalism.

Uninsured/Underinsured Motorist Coverage (UM/UIM)

This pays if you’re hit by someone who either has no insurance (called UM or Uninsured Motorist) or not enough insurance (called UIM or Underinsured Motorist). It covers your injuries and property damage. It also pays if you’re involved in a hit-and-run. All auto policies in Texas include UM/UIM coverage unless you sign a written rejection.  

If the at-fault driver is being uncooperative with their insurance company, or if the at-fault insurance company is delaying the investigation and handling of your claim, you have the option of filing with your own insurance under this coverage.

Gap Insurance

Gap insurance covers the amount needed to pay off your car loan if your car is totaled but the amount remaining on your loan is more than the value of your car.

This coverage is optional but can be a good decision right after you finance a new car. You can opt to drop this coverage once the amount owed drops below your car’s value.

Policy Limits and Deductibles

Limits

This refers to the maximum amount your insurance company will pay for a covered claim. For example, a limit for bodily injury liability might be expressed as $30,000 per person/$60,000 per accident for bodily injury. For per person coverage, it means if you cause the wreck and injure another person, then that person can collect up to $30,000. However, if you injure multiple people, your insurance company will not pay out more than $60,000 total to all injured persons in that wreck.

Deductibles

This is the amount you agree to pay out of pocket before your insurance kicks in. Higher deductibles usually mean lower premiums, but you’ll pay more out of pocket when you make a claim. You don’t want to be in a position where your deductible is much higher than you can comfortably afford in the event you would need to use your insurance.

Exclusions and Special Conditions

Exclusions

These are scenarios where your policy won’t provide coverage. Common exclusions include intentional damage, racing, or using your vehicle for commercial purposes without proper coverage (such as driving for Uber or Lyft)

Understand the Terms and Definitions

Insurance policies are packed with industry jargon that can confuse even the most diligent reader. Take the time to look up terms like “subrogation,” “endorsements,” or “total loss threshold” to grasp their significance in your policy.

Review Additional Benefits

Many policies offer extras like roadside assistance, rental car reimbursement, or coverage for personal belongings inside your vehicle. These can provide added peace of mind but require understanding their limits and conditions.

Ask Questions

Don’t hesitate to ask your lawyer, insurance agent, or representative for clarification on any aspect of your policy. They are there to help you make informed decisions.

Regularly Review Your Policy

Life changes, and so do your insurance needs. Review your policy annually or whenever you have a major life event (like buying a new car, moving, getting married or adding your teenager as a driver on your policy) to ensure your coverage still meets your requirements. Premiums also fluctuate so shopping around on your own or through a broker is always wise.

A Katy Car Wreck Lawyer Can Help in Understanding Your Car Insurance Policy

Understanding your car insurance policy is essential for making informed decisions about your coverage. A Katy car wreck attorney is well-versed in the types of coverage available, the limits and deductibles, exclusions, and additional benefits and how your policy (or the at-fault driver’s policies) can financially protect you in the event of a car accident.

Scott Callahan is board-certified in Personal Injury Trial Law and has handled thousands of car accidents covered by almost every car insurance company including Allstate, State Farm, Fred Loya, and Progressive. The firm is available 24/7 to answer your call and evaluate your car wreck claim.