What Are the Types of Coverage?
Personal Injury Protection (PIP)
provides basic economic loss benefits. If you are injured in an accident, this
portion of your policy pays you and members of your household, within the stated
limits, for medical expenses, lost wages, and replacement services. These costs
are paid no matter who is at fault. This is what is known as “NO FAULT”
coverage.
Liability covers claims to
your policy from another driver. It is also the portion of your policy that
covers damages to another’s vehicle, within the stated limits, when an accident
is your fault.
Underinsured coverage pays,
within stated limits, only for medical claims of those covered by your policy.
These benefits are in addition to your PIP benefits and are used when the other
driver is held responsible for the accident and does not have enough liability
coverage to cover your medical claims.
Uninsured pays for your
medical expenses after you have exhausted your PIP benefits and when the other
driver is held responsible for the accident but is not covered by insurance.
The above types of coverage are required; the following are
optional:
Collision covers damage to
your auto when you are involved in an accident with another vehicle or object.
Comprehensive covers a loss
that is NOT the result of a collision. This usually includes fire, theft,
falling objects, or an accident involving a deer.
To summarize the types of coverage
Required coverage applies when you
and others covered by your policy are in an accident:
You
collect on your PIP benefits, regardless of whether you or the other driver is
at fault. This is the no-fault portion of your policy;
If
the other driver is at fault, you make a claim against his or her LIABILITY
when your PIP benefits run out. You also can make a claim for damage to your
vehicle.
If
the other driver’s liability is insufficient, you collect on your UNDERINSURED
benefits for PIP coverage.
If
the other driver has no insurance, you collect on your UNINSURED benefits for
PIP coverage.
Optional coverage applies in cases of
damage to your vehicle:
As
noted above, if the other driver is at fault you may make a claim against that
driver’s liability coverage. If you are at fault, damage to your vehicle as a
result of an accident with another vehicle or object is covered under the
COLLISION portion of your policy.
If
your vehicle is stolen or damaged by vandalism, fire, or impact with a deer,
you are covered under the COMPREHENSIVE portion of your policy.
What about coverage of rental cars?
Minnesota
law requires every automobile insurance policy, under the property damage
liability portion, to provide a minimum of $35,000 in coverage, without a
deductible, for damage to, and loss of use of, a rental car (including pickup
trucks and vans under 26,000 pounds). State law further specifies that when a driver
rents a vehicle in Minnesota, a separate notice must be attached to the rental
contract that informs the driver of this coverage. The notice must also state:
“purchase of any collision damage waiver or similar insurance affected in this
rental contract is not necessary if your policy was issued in Minnesota.” The same law requires that no collision
damage waiver or other insurance affecting the rented vehicle can be sold
unless the person renting the vehicle acknowledges in writing that the consumer
protection notice has been read and understood.
What about coverage when you loan
your car to a friend?
What
if you loan your car to a friend, and he or she has an accident? If any of your
friends who are driving your automobile have an automobile insurance policy,
their injuries will be covered under their own policy, not yours. If they are
not covered under their own policy, and no one in their household is covered
under a policy, the basic economic loss benefits will be paid from your policy.
Who
pays for damage to the car, however, is not quite so simple. Your car will
always be covered under your own policy as long as the policy carries
comprehensive and collision coverage. Under certain circumstances, however, the
policy covering the other vehicle may pay for damage to your car. Check your
policy under the definition of “your covered auto.”