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What Mandatory And Optional Insurance Coverage Means

A car insurance declaration page can be pretty daunting to a typical consumer, so what do they all mean? It is important to know what you are covered for, especially for mandatory coverage’s, and if you are paying for something you may not need. Luckily the declaration page of an automobile insurance policy doesn’t have much fine print to read. The coverage’s are listed with applicable limits and deductibles. The task at hand is understanding what all these coverage’s and mean, and do I need them.

Per Massachusetts automobile insurance law the following coverage’s are mandatory, or as stated, compulsory. Bodily injury to Others essentially pays for damages in an accident you are liable for with regards to injury or death, but this does not pay for death or injury to someone who is a guest occupant in the vehicle. Personal Injury Protection, or PIP, is a no fault coverage, it makes no difference who is legally responsible for the accident. PIP mainly pays medical expenses and lost wages, to you, or other occupants of your auto, or a pedestrian, including yourself struck by your auto. It is designed to eliminate frivolous lawsuits. Bodily Injury Caused by an Uninsured Auto, it basically covers what it says. If you are in an accident with an uninsured auto that is at fault, this will cover damages in an accident, as well as damages received in a hit and run accident, when the operator and vehicle cannot be identified. Damage to Someone Else’s Property, this coverage is essentially Property Damage Coverage. This covers you for property damage you caused and are legally liable for in an accident, be it another vehicle or some other object.

 There are optional coverage’s that can be purchased, but actually may be mandatory of you carry a car loan or lease, and may be desired depending on your personal needs.  Optional Bodily injury to Others, similar to mandatory Bodily Injury to Others with the main difference being that it will provide damages to those killed or injured as an occupant. Also, much higher limits can be voluntarily be purchased. Medial Payments, as it sounds, pays for reasonable medical expenses incurred as well as funeral expenses, higher limits can be purchased. Collision pays for direct and accidental damage to your auto caused by a collision, less your deductible. Per law this is optional, but if you carry a car loan or lease the lien holder will most likely require proof of collision coverage. As far as optional coverage’s go this is one that you can pass on depending on the age and/or condition of your automobile. If your car is older, or has damage and probably isn’t worth much money, you may want to forego collision coverage or opt for a higher deductible. You may feel the same way about comprehensive coverage. Comprehensive coverage covers direct and accidental damage to your auto other than damage caused by collision, such as fire and theft, or falling objects, glass loss when not part of a collision is also covered, less deductible. Again, if the car is older or not worth much you may want to opt out, or chose a higher deductible. Limited Collision is a little tricky, it will only pay if you are no more than 50% at fault in a collision, less your deductible, and it will not pay in the case of a hit and run. It is a risky option to choose, and it may not be available if you have a loan or a lease, but it is substantially less expensive than full collision coverage, but may be worth it again if an older vehicle. Substitute Transportation is coverage for loss of use of your vehicle due to a collision or comprehensive loss, where the auto cannot be used for 24 hours or more. It does not just mean cost to rent a car, if you decide to pay for other means of transportation, such as a taxi, bus or train, those modes are also covered, but all means of transportation are subject to a maximum amount per day with a total limit cap, such as $100 a day, maximum $3,000 total. Towing and Labor pays towing and labor costs each time your auto is disabled. This coverage only pays for labor done at the scene; it does not pay for repair parts, such as tires or batteries. Note, this coverage does not pay for the cost of towing if you are towed for parking illegally or some other parking or moving violation. Bodily Injury Caused by an Underinsured Auto, like Uninsured Auto Coverage, this coverage part pays for damages when another vehicle is at fault but does not carry enough insurance.   

Optional coverage’s are a matter of risk appetite as far as collision, comprehensive, towing and substitute transportation choices go. If you opt out of these coverage’s, or select higher deductibles, you can sense what your maximum out of pocket expenses will be if you are in an accident. You have an idea what a tow costs or what renting a car for a few days will set you back. Of course bodily injury resulting from an accident is impossible to determine in advance, injury could be as slight as a bruised arm to death, and the expenses could be staggering, so it is important to purchase limits that you feel will protect you in the case of an accident you are responsible for, or if you are injured by an underinsured auto.  It is important to review your policy carefully and if you have any questions you should contact your insurance agent immediately.

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