By Selena Garrison, MS, Department of Family, Youth, and Community Sciences, University of Florida

Reviewed by Michael Gutter, PhD, Department of Family, Youth, and Community Sciences, University of Florida

This is Part 2 of our series on Understanding Car Insurance and Making Smart Choices. Today, we’ll finish up by talking about Uninsured and Underinsured Motorist Insurance and Physical Damage Insurance. To view Part 1, click here.

Coverage C: Uninsured and Underinsured Motorist Insurance

While it is illegal to drive without liability insurance in all states, people still do it. And if you are hit by an uninsured or underinsured motorist, you can end up with a lot of medical and property damage expenses that you have to pay out of pocket.

For this reason, car insurance companies offer Uninsured and Underinsured Motorist Insurance. This type of insurance protects you in the event that you are hit by a driver who has no insurance, or very little insurance.

Limits on uninsured and underinsured motorist insurance (which is completely separate from both liability insurance and medical payments insurance) are quoted with two numbers, such as 50/100. Again, each of these numbers represents a multiple of $100,000.

• The first number (50 in our example) gives the maximum that will be paid towards the medical bills of any one injured person in your car.
• The second number (100 in our example) gives the maximum that will be paid towards the medical bills of multiple people (you and your passengers) in the same accident.
• Some policies also provide coverage for damage to your vehicle, but this is not usually the case.

You should absolutely get uninsured and underinsured motorist coverage. It can save you a lot of money in the long run, and its cost is very low.

Coverage D: Physical Damage Insurance

Physical damage insurance covers damage to your car resulting from collision, theft, and other “perils.” (Remember, your liability insurance covers damage to other people’s vehicles, not yours.) If your car is worth very little, this type of insurance may not be the best option, but if your car is worth at least several thousand dollars, you may base your level of physical damage insurance on the value of your vehicle. There are two types of physical damage insurance.

• Collision Insurance – Reimburses you for damage from a collision with another vehicle or object, as well as from a rollover. It doesn’t matter who is at fault. This also usually covers you when you are driving someone else’s car (with their permission), and when you are driving a rental car (but check your policy).
• Comprehensive Automobile Insurance – Reimburses you for property damage from other perils, such as fire, theft, vandalism, hail, etc.

There are a few other options you can look into, as well, like towing coverage and rental reimbursement coverage, but they aren’t generally necessary. So grab your policy and READ IT to make sure you are comfortable with your coverage!

Finding the Best Rate

Insurance costs will vary depending on your age, type of car, family situation, and driving history. For the best rates, determine what types of coverage you need and shop around. You can also speak with your current provider to see how you may be able to lower rates, while still keeping the coverage you need.

If you are a member of a military, keep in mind that many insurance companies offer discounts for members of the armed forces, and you should definitely take advantage of them!

Car insurance can seem intimidating when you’re not familiar with the terms. It’s easy to feel confused about the value or necessity of various types of coverage. We hope this series has been helpful and informative for consumers making these choices.

(Photo credit: Franklin St & Elliot Rd by Frank Jania. CC BY 2.0. Cropped.)

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