Understanding Your
Insurance Policy

Collision coverage, Comprehensive coverage, Gap insurance, Uninsured and Underinsured motorist coverage, and Gap insurance all cover your own car in case you cause an accident or the other driver doesn’t have enough insurance. Most auto insurance policies require a deductible before any of these coverages can be bought. Depending on the type of policy you buy, the deductible could be as low as $250 or as high as $3,000. The deductible is the amount of money you have to pay the insurance company that you can’t get back. Look below for more information about the different types of policy coverage.

• Liability Insurance

Liability insurance pays for the person who wasn’t to blame. It pays for their medical bills, funeral costs, lost wages, pain and suffering, damage to their property, and loss of use. These things are covered up to the limits of your policy, which are shown on your declaration page. A standard liability policy in Texas covers you, your family, and other people who have your permission to drive your car. Who pays for your medical bills and lost wages, though? Personal Injury Protection (PIP) coverage pays for your and your passenger’s medical bills and lost wages up to the policy limits listed on your declaration page, no matter who was at fault.

• Liability Coverage

Liability coverage pays for the other person’s medical bills, funeral costs, lost wages, pain and suffering, property damage, and so on. All of these are covered up to the limits of your policy. Standard liability insurance in Texas covers you, your family, and other people who have your permission to drive your car.

• Medical Payments Coverage

The Medical Payments (Medpay) Coverage pays for your medical bills and funeral costs after an accident. It covers you, your family, and other people in your car, no matter who was at fault for the accident. Medical Payment Coverage is subject to subrogation, which means that your insurance company can get their money back from you once you get paid by the person who was at fault. We usually suggest buying a PIP policy instead of a Medpay policy.

• Personal Injury Protection

Personal Injury Protection (PIP) pays the same amount as Medical Payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person. But unlike Medpay, PIP is not subject to subrogation. This means you don’t have to pay it back if another insurance company pays for the same bills.

• Collision Coverage

Collision Coverage pays to fix or replace your car if it gets damaged in an accident. The most you can get is the cash value of your car minus your deductible. The actual cash value is the value on the market of a car like yours that is not damaged. It covers you, your family, passengers in your car, and anyone else who has your permission to drive your car.

• Comprehensive Coverage

Comprehensive coverage pays to replace or fix your car if it is stolen or damaged by fire, vandalism, hail, or something else besides a car accident. If your car is stolen, comprehensive coverage will also pay for a rental car or another way to get around for a short time. If your car is stolen, your policy won’t pay out unless you tell the police. The most you can get is the cash value of your car minus your deductible.

• Towing and Labor Coverage

Towing and Labor coverage pays for your car to be towed when it can’t move. Also pays for labor costs, like changing a flat tire, at the place where your car broke down.

• Reimbursement Coverage

If your car is stolen or being fixed because of damage covered by your policy, Rental Reimbursement Coverage will pay a set amount per day for a rental car.

• Uninsured or Underinsured Drivers Coverage

UM/UIM coverage is a type of first-party insurance that protects people who are hurt in accidents with people who don’t have insurance or don’t have enough insurance. It pays for your costs if an accident is caused by a driver who doesn’t have insurance or who doesn’t have enough insurance to cover your costs, up to the dollar limits of your policy. It also pays for accidents caused by a driver who hit you and drove away if you told the police right away. Physical harm UM/UIM pays for medical bills, lost wages, pain and suffering, disfigurement, and full or partial disability without any deductibles. Property damage UM/UIM covers repairs to your car, a rental car, and damage to things in your car. There is an automatic $250 deductible, which means you have to pay the first $250 of the repairs yourself. The UM/UIM policy pays for damage to property, repairs, replacements, and rental car costs. It also takes care of claims for personal injury and wrongful death. When an insurance company pays a UM/UIM claim, the amount the insured gets back from the negligent third party can be taken out of the payment. It covers you, your family, passengers in your car, and people who have your permission to drive your car.