Types of Auto Insurance Coverage

Automobile insurance is sold by type and with different limits. The type is how broad the coverage is (or what it covers), and the limits are the depth of coverage. In Arizona, Liability insurance is the only insurance required by law. The term “full coverage” is also very misleading and there really is no such thing as full coverage. There are many types of insurance coverages for your automobile. You should consult with your insurance sales person or broker and/or a lawyer if you have questions about your car insurance.

This is meant to be a guide as to what types of coverages are available for you in Arizona. Note that all companies do not offer all types of coverage and there can be different coverages on different vehicles. This guide covers insurance coverage in Arizona, but note that sometimes people buy their insurance in other states or countries and may be driving in Arizona. For further information and reading, please consult the Arizona Department of Insurance. https://insurance.az.gov/

Insurance is simply a contract between a person or entity and their insurance carrier. You pay premiums, and in exchange the insurance carrier provides you with Defense and Indemnity in the event of a loss. Insurance policies will vary by insurance carrier, so you should read your policy and discuss your coverage(s) with your broker.

Liability
Liability insurance covers damage that you do to others. This is required by law in Arizona. The minimum limits required are 15/30/10 or $15,000.00 for bodily injury damage done to others – per person limit, $30,000.00 bodily injury limit per occurrence, and $10,000.00 limits for property damage done to others. It is called Liability insurance coverage because it protects you from liability for damage or injury that you do while driving up to the limits of the insurance policy. Higher limits offer more protection for you in the event that you cause property damage or an injury to another. People with assets or substantial income should have higher limits Liability insurance to protect themselves.

Collision and Comprehensive
Collision covers your vehicle in the event of a collision and comprehensive covers the vehicle if there is other damage. This coverage usually has a deductible (See infra.), and may have some disclaimers and limitations in the policy. Your policy will dictate the type of parts that can be used in a repair, whether you can make a diminution in value claim with your insurance carrier, and other important terms that may vary by insurance carrier. Your lender may require this coverage if you have a loan on your vehicle. Liability and Comp/Collision coverage are typically the more expensive of insurance coverages.

Roadside Assistance
This insurance coverage pays for towing charges in the event of a collision and some policies may include mechanical failure. This coverage may cover a battery jump, some gas if you run out, and some emergency repairs while travelling. Many people have this insurance with a company separate and apart from their automobile insurance. Note, that there may be limitations on your policy.
Rental Coverage
Rental coverage covers you in the event that your car is damaged or totaled in a collision. This coverage will pay for your rental, but note that there are almost always limitations on the total amount that they will pay and/or the per day charges. Some carriers offer split policies such as an 80/20 policy where the insurance carrier will pay 80% of the rental bill and the insured must pay 20%. Other policies limit you to $25 or $30 per day for a number of days or a total number like $500.00 or $1,000.00 total rental charges. If you do not have this coverage, talk to a car accident lawyer about how to get into a rental paid for by the other driver’s insurance. In all instances, your rental coverage ends when repairs are complete (should have been completed) or when you (and/or your lender) are paid for the total loss value of the vehicle.

Uninsured / Underinsured Motorist Coverage (UM/UIM)
This coverage is very important as it protects you and those in your vehicle when there is an injury to you or your passenger(s). In Arizona, your insurance carrier should have you sign or initial to decline this coverage or you may by be afforded the coverage under the law. This coverage does not pay for the loss to the vehicle when there is a collision with an uninsured driver; that is your comp/collision coverage. It pays for bodily injury to you and any passengers. Additionally, under Arizona law, this coverage may be extended to your relatives that reside with you. This insurance coverage steps into the shoes of the other driver, so they would have all the same arguments against your claim that the other driver’s insurance carrier would have when evaluating your claim. You can, however recover for wage loss, pain, suffering, discomfort, and other general damages. You should seek the advice of an accident lawyer when there is a UM/UIM claim even though it is your own insurance to maximize your recovery, because your insurance may use the other driver’s arguments against you. I understand that this coverage is particularly inexpensive because most people do not know that they can make a recovery when they are in a collision and are injured by an Uninsured motorist. In some instances UM/UIM policies may also be “stacked.” There are a number of other complexities regarding UM/UIM law in Arizona. If you are injured by an Uninsured motorist, you should always consult with a car accident injury lawyer.

Medical Payments or Personal Injury Protection Coverage (Med Pay / PIP)
This is another coverage that a good injury lawyer may use to maximize your in pocket recovery when you are injured in a car accident. Med Pay coverage pays your medical bills when you are in a collision. Other states call this PIP coverage and the terms vary by state. In Arizona, the law intends this to be an automatic coverage where your bills are paid by this coverage and then you may recover additionally from the third party coverage or UM/UIM. In recent years, some insurance carriers have sought to limit what they pay on these claims by inserting various exclusions. Examples of this are “health insurance first” provisions where the Med Pay pays only what the health insurance doesn’t pay or “reasonable and customary” exclusions where the insurance carrier can reduce your bills by what they believe to be reasonable and customary and you are only paid the reduced amount. Another limitation is called an “offset provision,” where your UM/UIM recovery is reduced or offset by what is paid out under the Med Pay coverage. There are many intricacies and nuisances to Med Pay coverage and a good injury lawyer will use this type of coverage to maximize your in pocket recovery when you are injured in a car accident.

Gap Coverage
Gap Coverage will cover the amount between the fair market value of your vehicle and the amount of your loan on the vehicle in the event of a total loss. In other words, if you are upside down on your vehicle (you owe more than its worth), this is insurance to cover the difference between the value of the vehicle and the loan amount due. Many times your lender will require you to have this insurance and often it is with another insurance carrier other than your other coverages. Sometimes it is with an insurance carrier affiliated or preferred/required by the lender, and sometimes it is purchased or set up at the dealership where you bought the vehicle. You should consider gap coverage when financing a vehicle and you should contact your lender, dealership, and insurance carrier to see if you have gap coverage when your vehicle is totaled and the loan is more than the value.

Umbrella / Excess
You can also purchase umbrella or excess coverage and many times this is through another insurance carrier. The excess coverage does not typically afford any broader coverage or coverage for areas not covered by the underlying coverage. Excess coverage is another policy that increases the limits above the underlying policy. There are many details and intricacies of excess coverages. You should consult with an insurance professional and attorney to discuss purchasing excess coverage or any claim that might implicate excess coverage,

Other Insurance Coverages
You may have other coverages or benefits under your policy. Some carriers offer these coverages to try to distinguish their product from another. These coverages include pet care, household services, death or dismemberment benefits, wage loss, child care, and many others. Some insurance carriers offer decreasing deductibles, decreasing premiums, or accident forgiveness where your rates are not increased for one at fault loss. Additionally, some people have a separate towing plan such as AAA that may have additional benefits. These other benefits may be substantial when you have a loss. You should consult with an experienced car accident lawyer whenever you are involved in a car accident.

Other Insurance Coverage Related Considerations

Insurance Policy Limits
Insurance policy limits are the maximum amount an insurance policy will pay out in the event of a covered loss.

Deductible
Deductible refers to the amount that the insured will have to pay in the event of a loss. This typically applies to collision coverage and is the first amount to be paid.

Exclusions
Exclusions are losses that your insurance does not cover and these may vary from one insurance carrier to another. A couple of examples that are common are disclaimed drivers. Often insurance carriers will not cover a driver in the household such as a younger driver because the risk is greater. Some policies also do not cover you when you are on a motorcycle. This is called a motorcycle or two or three wheel exclusion. Talk to an insurance professional or attorney when purchasing insurance. Always talk to an experienced car accident lawyer when you are in a collision!
It is not possible to cover all of the intricacies and details of insurance coverage in one article. This is meant only to be a guide for the basic types of insurance coverage. A skilled injury lawyer will use the various types of insurance coverages and benefits available to maximize your in pocket recovery when you are injured in a car accident. If you are injured in a car accident or have questions, call an experienced car accident lawyer!!