Full coverage auto insurance or liability only?

An auto insurance policy is a legal contract between you and the insurance company. Most auto insurers offer four basic coverages - liability, uninsured and underinsured motorist, medical, and physical damage. A variety of optional endorsements may also be available.

Liability insurance pays if you cause a crash and are legally responsible for the other person's damages. It also pays for a legal defense if you are sued because of the accident. Liability is often split into two separate coverages - bodily injury and property damage. Request liability limits that adequately protect your financial assets. State minimum requirements may not be enough to pay the other driver's damages if you are responsible for a serious crash.

Uninsured and underinsured motorist coverage pay for injury-related damages such as medical bills, lost wages, or pain and suffering that you and your passengers have as the result of an auto accident with an uninsured driver or one that has limits lower than your underinsured motorist coverage limits. UM and UIM do not pay for damage to your vehicle. It is best to match uninsured and underinsured motorist coverage with your policy's liability limit.

Medical payments is a third basic coverage found in the auto insurance policy. It pays medical and funeral expenses for you, resident family members, or passengers who are injured or die in an auto accident. Med pay also covers you or resident family members injured by a car while walking, bicycling, or riding in another auto.

Physical damage pays for repairs to your auto. Illinois law does not require physical damage coverage, but your lender may. Physical damage is split into two separate coverages, both with deductibles. Collision pays for damage caused by an accident with another car or fixed object. Comprehensive (or other than collision) pays for damage caused by events like theft, vandalism, hail, fire, falling objects, and animals. Consider different comprehensive and collision deductibles. Compare the insurance cost savings of a high deductible to your emergency out-of-pocket fund when making a decision.

Insurance companies typically offer a variety of policy add-ons for an extra fee. These may include towing, rental car reimbursement, uninsured motorist property damage, new car replacement, gap coverage for leased or financed vehicles, accidental death benefit, and more.

Review your auto coverages line by line. Be certain the optional endorsements you want are listed. Confirm teenagers and adults in your household are identified as potential drivers. Verify vehicle information is accurate, as well as identifying details like your address, the lien holder's name and address vehicle usage, etc. Take a look at the policy itself as well. Be familiar with coverages, exclusions, and limitations.

Make sure your policy provides adequate protection before a loss occurs!