Most consumers understand the concept of car insurance but might not understand the bits and pieces that make the picture clear. We will be exploring the different pieces of auto insurance in New Jersey.
Liability in general is the responsibility for the consequences of an incident. Bodily injury liability is the first line item on your declarations page. The number reflected here is the amount that would be paid out on your behalf in the event of an at-fault accident. The second line is property damage liability. The number here also reflects the maximum monetary amount of coverage one has if someone else’s property is damaged in an incident. The amount of coverage for bodily injury and property damage is referred to as the limits of liability. A vehicle’s limits of liability are extremely important because in the event of an accident, if they are not high enough, one can be sued beyond the means of insurance, and a lien can be placed on material assets. The home is the usual target for this.
Ever wonder what happens if another person hits you that has no insurance? Well, in the state of New Jersey, it is mandatory on a liability auto policy you have coverage for this exact situation. Underinsured or uninsured coverage usually matches your limits of liability for bodily injury unless otherwise stated. In the event of an accident with someone who does not have enough insurance or has no insurance at all, this part of your insurance kicks in and your carrier pays for damage to your vehicle.
Now onto what the term full coverage means. You probably hear this all the time, but do not know that it has to do with comprehensive and collision. These coverages are for your vehicle in the event of an accident. Comprehensive coverage covers you in the event of a loss from fire, theft, vandalism, hitting a deer, and anything other than you colliding with something. Collision on the other hand is exactly what it sounds like: if you hit something, or if something hits you, you have coverage for your vehicle.
Simply said: Liability is coverage to protect you and your assets. Full coverage is there to cover your vehicle. If you are ever curious about your coverage, be sure to discuss it with your provider.
